Home World Business Qantas signs credit card deal with Citi

Qantas signs credit card deal with Citi

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Qantas has launched a new credit card promising more frequent flyer points at the same time as its loyalty scheme has helped power the airline’s share price to an almost 10-year high.

Qantas on Friday confirmed long-speculated plans to offer its own credit card through a tie-up with Mastercard and investment bank Citi.

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Qantas Loyalty chief executive Lesley Grant said the card was a response to the strong consumer demand for points as part of everyday spending.

“Around 35 per cent of credit card spend in Australia earn Qantas Points, which shows strong interest in this type of reward but also plenty of room for growth,” said Ms Grant.

Qantas Loyalty chief executive Lesley Grant says the new credit card is about giving customers more choice. Qantas Loyalty chief executive Lesley Grant says the new credit card is about giving customers more choice. Photo: Sasha Woolley

“Ultimately, it’s about giving customers more choice by widening the range of cards that you can earn points on and adding some unique features that only Qantas can offer.”

Qantas declined to release any information on how many points card customers will receive or other conditions ahead of a more detailed launch by the end of the financial year.

Citi Australia’s Consumer banking head Julian Potter said the bank was delighted to be involved.

“This partnership continues Citi’s strategy of bringing world-leading financial services capabilities to Australians and is further evidence of our commitment to grow our credit card business in this market,” he said.

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That news followed a 2 per cent profit outlook upgrade on Thursday night which sent Qantas’ share price up 2.26 per cent to $4.52 in the mid-afternoon, its highest altitude since 2008.

UBS analysts, led by Simon Mitchell, told their clients that the outlook was pretty clear for Qantas after an end to cut-throat competition with Virgin Australia and falling fuel prices.

“Qantas appears to be in the early stages of a recovery from temporary dislocation in the domestic market and a period of high international capacity growth,” the analysts said.

They also called out Qantas’ loyalty scheme as strong point of difference relative to other airlines.

Qantas told investors it wanted to lift pre-tax profit from its loyalty business from $346 million last year to up to $600 million in 2022 partly through diversifying into new products such as financial services.

Qantas’ share price is now up 30 per cent so far this year but is still trading at a discount to its rivals.

“We believe investors are re-assessing the appropriateness of Qantas trading at a discount to its peers given the company’s superior earning quality (two-thirds of earnings from domestic duopoly and loyalty franchise,” the note says.

Macquarie Research analyst Sam Dobson said Qantas was expecting a record profit from its domestic business even though the mining downturn was affecting demand.

He identified the performance of the loyalty scheme as one of three key areas of interest ahead of Friday’s investor day.

More information on the Qantas credit card will be available when applications open before the end of this financial year.

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