Transport Airlines

Qantas Edges Closer to Selling Its Frequent Flyer Program

May 09, 2014 4:30 pm

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In January, Qantas officials floated the idea of selling the airline’s frequent flyer program. They are still working through the details of this “highly complex issue,” which certainly won’t be a cure-all for the airline’s woes.

— Dennis Schaal

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A woman traveler enjoys the atmosphere at the Qantas First Class lounge in Sydney. Qantas

Qantas Airways Ltd., the Australian airline that’s cutting 5,000 jobs in an attempt to reduce costs by A$2 billion ($1.9 billion), is weighing whether to sell a stake in its Frequent Flyer loyalty business.

Australia’s largest carrier was “working through the pros and cons” of selling part of its largest unit by operating profit, Chief Executive Officer Alan Joyce told a conference in Sydney May 9. The company could raise as much as A$1.56 billion selling a stake, JPMorgan Chase & Co. had said earlier.

Qantas is looking to cut costs and increase cash amid heightened competition with Virgin Australia Holdings Ltd. domestically that’s forced the carriers to cut ticket prices to fill seats. Seat-capacity growth is slowing to about 3.5 percent in the six months to June on domestic routes and is heading down to 4 percent to 5 percent internationally, Joyce said, raising the prospects that prices will become more sustainable.

“We’re still working through” a sale of the Frequent Flyer loyalty business Joyce said. “It’s a hugely complex issue.”

To contact the reporter on this story: David Fickling in Sydney at dfickling@bloomberg.net To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net Dave McCombs

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