November 16, 2011 / 2:53 AM / 6 years ago

Qantas hopeful on deal with unions, shares rally

SYDNEY (Reuters) - Australia's Qantas Airways (QAN.AX) is hopeful of reaching an agreement with three key unions by a November 21 deadline, its chief executive said on Wednesday, after it grounded its fleet last month in a desperate bid to end industrial disputes.

The optimistic comments, just days before the deadline imposed after the government intervened in the dispute, sent Qantas shares up as much as 7.6 percent to their highest in more than three months.

"Qantas hopes for a positive resolution and lack of any negative comments from parties is adding to the certainty and boosting the shares," said Michael McCarthy, chief market strategist at CMC Markets.

The airline's shares were up 4.2 percent at A$1.72 by 0245 GMT, compared with a broader market down 0.5 percent.

Qantas has held talks over the past two weeks with the three unions representing its pilots, aircraft engineers and baggage handlers, which are all wary about the airline's moves to cut costs and set up new Asia-based airlines.

"We continue to be hopeful we can reach an agreement," Joyce told reporters, speaking at an event to mark the airline's 91st anniversary against the backdrop of Boeing's (BA.N) 787 Dreamliner.

Qantas, along with its low cost unit JetStar, has ordered 50 Dreamliners with the first aircraft set to be delivered by mid next year.

The federal government intervened as a result of the grounding, and workplace umpire Fair Work Australia ordered an end to the industrial action.

The ruling gives both side until Monday to settle the dispute or submit to binding arbitration. There could also be an extension of negotiations if the parties agree.

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Qantas shares, which have lost nearly a third of their value this year, touched a near-record low this year as the dispute with the unions escalated and forward bookings dived.

The shares have recovered 14 percent since the government intervention as it provided certainty to Qantas operations during the busy Christmas holidays.

A spokesman for The Australian and International Pilots Association declined to comment on the progress of talks.

The pilots union said last week it had launched court proceedings challenging an order to end industrial action at Qantas, though the union said it remains fully committed to negotiating an outcome with the airline.

The Transport Workers Union and the Australian Licensed Aircraft Engineers Association, the other two unions at the center of the dispute, were not immediately available for comment.

Union leaders and Qantas workers in Britain said in a statement they planned to hold a rally outside the Australian High Commission in London later on Wednesday.

Qantas is under pressure to cut costs as its international business is operating in the red, and is looking to grow by setting up two new airlines in Asia, including a premium airline joint venture, which would not be subject to the constraints Qantas faces at home.

Joyce said the airline had held "productive" talks with Malaysia's two major airlines, Malaysian Airline System (MAS) MASM.KL and AirAsia (AIRA.KL) about plan to set up a premium airline.

Qantas is also talking to Singapore Airlines (SIAL.SI) on the premium airline plan. Successful talks could lead to locating the airline either in Singapore or Malaysia to tap the soaring inbound and outbound Asian travel and lower costs.

Additional reporting by Sonali Paul in Melbourne; Editing by Ed Davies

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