Qantas is weighing up a pact with Emirates to help bolster its ailing long-haul division.
But any codeshare between the two carriers could challenge the long-term partnership between Qantas and British Airways on the lucrative Kangaroo route between Australia and London.
An alliance with Emirates would offer the Dubai-based carrier greater access to the Australian domestic market and allow Qantas to fly to Europe via the Middle East.
Qantas confirmed the talks with Emirates among other airlines on possible alliances, in a statement to the Australian stock exchange.
“Strengthening alliance partnerships is one of the four pillars of the Qantas Group’s five-year strategy.”
Qantas and Emirates are said to be in “late-stage talks” about the plan, according to a report in the Financial Review in Australia.
As part of the arrangement, Qantas would shift some long-haul flights to Dubai from Singapore and halt services to Frankfurt.
That would leave London as the only European city served by Qantas aircraft.
Emirates president Tim Clark told the Financial Times that the talks with Qantas were confined to a codeshare agreement under which the Australian carrier might rely on the Gulf airline to fly passengers to Dubai or beyond.
The Gulf carrier could also tap into Virgin Australia’s domestic passenger traffic for its long haul network, he added.
“The idea is each carrier offers the other the benefits of its network,” said Mr Clark, adding that no decisions had been reached between the two airlines.
Qantas has forecast that losses on international routes are likely to more than double to A$450 million in the 12 months to June because of higher fuel costs and market share losses.