Embattled Qantas saidit was in talks with carriers including Emirates to revive its struggling international arm, an alliance that could see itsEurope-bound flights routed through Dubai.
The revelation, whichsaw Qantas's share price soar 9.6 percent, is part of the Australian airline'sdrive to turn around its fortunes after an 83 percent slump in first-half netprofit in the six months to December.
"Qantas confirmsit is in discussions with a number of airlines about potential alliances,"it said in a statement as its shares, which have been trading at record lows,surged to close at Aus$1.085.
These airlines includeEmirates, among others.
"Qantas's policyis not to comment on the nature or status of these discussions."
Last month Emirateschief executive Tim Clark told Dow Jones Newswires he was not interested in anequity investment in Qantas but was keen on other types of commercialarrangements, such as codesharing.
The AustralianFinancial Review said that codeshare negotiations were at an advanced stage andwould give Qantas access to the network of the largest international carrier in the world.
Qantas is primarilylosing money on its international routes.
The tie-up would seeQantas fly to Dubai for the first time and rely on its new partner to transferpassengers to destinations in Europe, the Middle East and Africa, the newspapersaid.
This would mean mostLondon and other European flights going through Dubai instead of Singapore,casting a cloud over its long-standing joint venture with British Airways.
The newspaper said alink-up with Emirates would allow Qantas to maintain a global focus withouthaving to use its own planes, as high fuel costs sap profits.
It would also give thecarrier scope to fly more aggressively to Asia, a stated goal of chiefexecutive Alan Joyce.
In return Emirateswould get access to Qantas's market-leading share of Australian domestictraffic.
But analyst NeilHansford, from Strategic Aviation Solutions, said he doubted an Emirates tie-upcould save Qantas.
"It's a goodtheory but code shares are band-aid solutions," he said.
"Just by Emiratesgiving Qantas a bigger network won't save a business losing $500 million."
Qantas is strugglingwith soaring fuel costs and worsening global conditions and recently warned itsunderlying profit before tax was expected to drop from Aus$552 million (US$574million) last year to Aus$50-100 million.
It saw Moody's lowerthe airline's long-term senior unsecured rating to Baa3 from Baa2 with a stableoutlook in January.
The ratings agencyThursday said a sustainable and profitable international business was key to Qantas maintaining aninvestment-grade rating over time.
"A scenarioinvolving a major tie-up with a Middle East or Southeast Asian-based hubcarrier could alleviate some of the strategic disadvantages that Qantas facesas an end-of-line carrier," said Moody's vice president Ian Lewis.
"We see a partialsale and/or strategic alliance as being a more realistic scenario than a fullsale or wind-down scenario for the international business," he added.
