Qantas boss Alan Joyce believes the airline’s loss making international arm is turning a corner, and says a sliding Australian dollar could put it in a “sweet spot.”
He says the recent drop in the local currency to an eight month low will make it easier for Qantas to compete with its international rivals.
The Australian dollar has dropped from nearly 94 US cents to 87 US cents in just three weeks, due to the prospect of US interest rates rising next year.
“It narrows the gap in terms of our competitive cost base with other international carriers,” Mr Joyce said.
A lower Australian dollar would also boost the airline’s local business, including Jetstar, he said.
“Because we have 65 per cent of the domestic market we obviously disproportionately benefit from Australians staying home and travelling,” he said.
But Mr Joyce said he’d like to see the currency fall further, to around 80 US cents.
“The sweet spot for us is in the low 80s, in an ideal situation.”
He said the lower dollar would push fuel costs up, but that would be offset by a recent slide in oil prices and currency hedging.
His comments came as Qantas launched an A380 service between Sydney and Dallas/Fort Worth.
“This is a vote of confidence in Qantas’s international operations going forward,” Mr Joyce said.
“We believe that this business is turning the corner.”
The Sydney-Dallas service – the longest route in the world – had been an “amazing success” for Qantas, Mr Joyce said.
Passenger numbers on its international flights continue to decline, down 2.1 per cent in August when compared to the same month a year ago.
However revenue per passenger was up 1.7 per cent in the same period.
Passenger numbers across Qantas were up 3.2 per cent for the month, with strength in Jetstar and Qantaslink offsetting weakness in the international business and a five per cent slide in passengers in the Qantas branded domestic operations.
Qantas suffered a record $2.8 billion loss in the 2013/14 year, due to a $2.6 billion writedown to its ageing international fleet and a $497 million loss from its international division.