Despite union opposition, Qantas Chief Executive Alan Joyce said the national carrier still plans to push through setting up a hub in southeast Asia and to fast track plans to enter into closer alliances with other airlines.

"Nothing has changed about our preparedness to turn around our international business. If anything, it means we have to accelerate and keep on going with our plans to turn it around because the high fuel prices and the economic conditions mean that the turnaround plan is critical," The Sydney Morning Herald quoted Mr Joyce.

He hinted that Qantas has a higher preference for Kuala Lumpur over Singapore because of Malaysia Airlines' Onewold Alliance, to which Qantas also belongs. The final decision where to set up the ultra-premium carrier, however, is still a few weeks away.

Macquarie Equities analysts said Qantas was likely to favour a less-capital intensive and deeper codesharing arrangement with the Malaysian air carrier over one with Singapore.

Mr Joyce doused previous reports that Qantas has set aside the plans to set up a new premium airline based in Asia due to the impact of the European economic crisis on the aviation industry.

However, due to higher aviation fuel costs and labor row with the unions, Qantas is expected to post an underlying net profit of $140 million to $190 million for the second half of 2011. In the first half, the air carrier reported a $417 million underlying profit.

The prolonged strikes cost Qantas $194 million and have resulted in Qantas shares falling down to its lowest since Oct. 6. Qantas stock closed at $1.455 on Friday.

Since Fair Work Australia assumed jurisdiction over the labor row, Mr Joyce said Qantas's forward bookings has recovered, including domestic bookings from corporate accounts and are back at normal levels.

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