Qantas to Expand International Unit After Joyce’s Turnaround

  • Qantas to start 17-hour Perth-London flight in March 2018
  • Australian flag carrier sees continued growth in China travel

Qantas' Joyce: See Amazing Growth From China

Qantas Airways Ltd. plans to expand its international business after a three-year restructuring effort by Chief Executive Officer Alan Joyce helped deliver record profits for the Australian carrier.

The division, which was losing money before the turnaround, is now in a position to grow, Joyce, 50, said in an interview in Beijing with Bloomberg TV Thursday. Joyce earlier flew on Qantas’s first service to the Chinese capital from Sydney since the route was axed following the global financial crisis.

Under Joyce, the Sydney-based carrier ditched many unprofitable long-haul flights in favor of alliances with Emirates, China Eastern Airlines Corp. and American Airlines Group Inc. With the turnaround yielding profits and the airline reinstating dividends, Qantas is gradually expanding its international business. Revenue from the division increased in each of the past two fiscal years, accounting for 29 percent of the total.

“We’re obviously going to be gingerly about how we go about re-growing the international business,” said Joyce. “Qantas international is now doing a lot of growth because its cost base is right, its profitability is right. Now is the right time to invest in that growth.”

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One key area of growth internationally is China. Last year, the Chinese overtook New Zealanders as the No. 1 tourists to Australia. To further fuel that, in December, Australia’s government announced an agreement with China to remove all capacity restrictions between the two nations.

Last year, Australia attracted 1.2 million of the 100 million Chinese tourists worldwide, Joyce said. Even if Australia kept 1 percent of the possible 400 million tourists that China has predicted will travel over the next decade, Qantas is looking at a very big market, he said.

Qantas is due to announce first-half results on Feb. 23. The carrier has warned profit for the period might be down as much as 13 percent as competition drives down international air fares. Underlying profit before tax will be between A$800 million ($606 million) and A$850 million for the six months ending Dec. 31, down from A$921 million a year earlier, Qantas said on Oct. 31.

This year, Qantas will receive the first of its eight Boeing Co. Dreamliners and in 2018 will start the world’s first direct flights between Perth and London, a 17-hour non-stop flight. Joyce has said if he can turn a profit from the first few Dreamliners, he’d like to order the remaining 45 that Qantas has options and purchase rights to buy.

At the same time, Qantas has repeatedly deferred orders for eight A380 superjumbos made by Airbus Group SE. Qantas operates its 12 A380s on routes like Sydney or Melbourne to London via Dubai, and to Hong Kong, Dallas and Los Angeles.

The superjumbo may be used on Asian routes in the future, Joyce said Thursday.

Joyce, who took the top post in 2008, said he intends to continue with the airline.

“I’m not going anywhere,” he said. “As long as the board and the shareholders still want me to do the job and I’m enjoying it, I’ll continue to do this job.’’

— With assistance by Tom Mackenzie, and Angus Whitley

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