Qantas hands out $1.4b in managed services

Telstra and IBM have won managed services contracts with Qantas valued at an estimated $1.4 billion in revenue. The pair of contracts are two of the largest ever signed in Australia.

Telstra's Services Solutions division has won a $750 million, seven year contract to manage all Qantas' voice, desktop and network managed services.

Telstra will be working with IBM, which has separately won a $650 million, ten year deal to manage the delivery of data centre operations, mainframe and mid-range computing and some other managed services.

Some 192 Qantas staff had lost their jobs as a result, but more than half had either found roles with either Telstra or IBM or had been re-deployed within Qantas, the airline said in a statement.

Warwick Ponder, a spokesman for Telstra, said the deal broadened the telco's relationship with Qantas. Previously, Telstra had mainly provided telephony services – including broadband – to the airline but the new deal was more IT&T-focused, he said.

'It represents a 43 percent increase of the revenue we were making with our current arrangement with Qantas, in the first year,' he said.

Telstra will manage desktops and its associated software, WAN, ancillary services, voice services and migration to a fully IP-capable network. Telstra handled the voice aspects before – but not managed voice services, Ponder added.

Ponder said the recent KAZ acquisition was likely to 'add value' to the deal, although Telstra had won the deal on its in-house merits, he said.

Telstra expected to net gradually increasing revenue from its services division as time went on. However, Telstra was not trying to compensate for decreasing earnings from its traditional lines of business, Ponder said.

'Mobile and broadband [for example] have become more profitable. Fixed line is something we're working on in terms of adding value to services,' he said. 'But I think it's important that telecommunications businesses look at [broadening their scope].'

IBM was not available for comment at press time. However, it is understood that IBM also had a previous relationship with Qantas.

IBM recently bought Logicalis Australia – a specialist voice integrator and service provider.

Fiona Balfour, CIO at Qantas, said the airline's IT needs were growing. Existing infrastructure and facilities could no longer meet its needs, she said.

'Qantas' reliance on technology has grown exponentially in recent years,' Balfour said. 'Everything we do depends on technology, from our online booking engine and ticketing to load and departure control, as well as technological advances on board our aircraft and at airports.'

International airlines were increasingly turning to service providers to build and manage their data centres, Balfour said.

Transition into the new deal would begin 31 May, with deployment to be completed in two years, she said.

'This partnership with IBM and Telstra will also enable us to build our own capabilities and modernise our network,' Balfour said.