Qantas to issue its own premium credit card

The Qantas Group has announced it is to offer its own premium credit card.

Qantas Loyalty chief executive Lesley Grant. Picture: Sam Mooy

The Qantas Group has continued to look beyond the frequent-flyer business to diversify the growth of its loyalty division, yesterday announcing it would offer its own premium credit card.

The carrier used yesterday’s investor day to announce the Qantas-branded platinum card, which comes after the launch of new life insurance and health products, and a travel money card in 2013.

“We are already competing in the financial services market and with 35 per cent share of spend on Qantas co-branded credit cards in Australia ... we see more opportunity for growth,” Qantas Loyalty chief executive Lesley Grant told investors.

The new card will be produced via a partnership with US financial services giant Citi — which also provides other “white label” credit card services to businesses including Coles, Suncorp and Virgin Money — and Mastercard. It will be launched by the end of next month.

The move comes as new rules capping interchange fees are due to come into effect from July, a move that is expected to see banks buying fewer frequent-flyer points from the airlines for reward schemes.

Qantas told investors the interchange reset was having a short-term impact but new offers would maintain growth.

Ms Grant said that financial services was “a market in transition for us”, with banks telling customers in the past week they were making changes because of the interchange move.

Qantas Loyalty had $346 million in underlying earnings before interest and tax in 2016 and is forecast to grow this to between $500m and $600m by 2022, largely driven by new business.

“We’re building new product constructs with our partners and this will give us the opportunity to further broaden our revenue base,” Ms Grant said.

The investor day came a day after Qantas revealed it was expecting its underlying profit before tax would be between 8.5 per cent and 11.7 per cent lower than last year’s record $1.53 billion, but still the second biggest on record.

Qantas shares closed up 2.26 per cent at $4.52, a nine-year high.

The airline also detailed plans for 2018 to 2020 for an average yearly “transformation” benefit of $400m to offset $250m in yearly inflation to the cost base over this time. Already it has cut jobs, reduced debt and simplified the fleet as part of its corporate turnaround strategy.

The biggest gains will come from technology, with the rollout of the Boeing 787 Dreamliner and a new flight planning system.