THE DISTILLERY: Qantas thrill

The big news this morning is the revelation in The Australian Financial Review that Qantas is in late-stage talks with Emirates about a potential joint venture. Jotters there got the jump, of course, and they're keen to draw attention to the significance of the scoop – one commentator thinks its going to completely transform the airline. Elsewhere, there are discussions about Macquarie Group's future, and disagreement about the significance of Australia's latest inflation data.

But first, The Australian Financial Review's Andrew Cleary focuses on the potential deal between Qantas and Emirates. While he notes there are plenty of obstacles to a meaningful tie-up, he reckons a "transformational" Middle Eastern agreement with Emirates might be just the jolt the struggling Australian airline needs.

"An alliance with Emirates would represent a wholesale repositioning of the Qantas brand and network away from its traditional ties with British Airways and the oneworld network, pointing it towards a future based on bilateral agreements with untested new partners. … The ground is shifting beneath Joyce's feet, with John Borghetti at Virgin Australia surrounding himself with a powerful team of international partners while everyone from the Chinese to the Gulf carriers and Asia's low-cost newbies target Australia for expansion. There's a saying about desperate times calling for drastic measures. The outlook for Qantas International is desperate indeed, and time is rapidly running out for Joyce to turn it around. He could do a lot worse than taking the drastic step of forging a brave new future alongside Emirates."

From one downtrodden Australian giant to another, Fairfax's Adele Ferguson is unimpressed with Macquarie Group's "highly conditional" suggestion that its profits would improve next year. A big slump in the company's share price seems to indicate investors agree.

"The comments by Moore that 2013 was set to be better than 2012, was qualified by the fact that things don't get worse globally. That is something he can't control and the way the eurozone and the US are looking, global markets will remain volatile and corporate deals will remain subdued. Last year the company put the axe through expenses and it seems that is part of the reason why the first quarter of 2013 looks better than the first quarter of 2012. But one swallow doesn't make a summer."

However, Business Spectator's Stephen Bartholomeusz commends Macquarie's cost-cutting, and points out it has avoided the scandals and speculative trading losses that have dragged down its global peers.

"If and when conditions improve – particularly for its securities business – it is well positioned, even if it seems unlikely that investment banks will ever be able to return to their halcyon pre-crisis condition, given the changes in the environment and the regulatory settings. If they don't – if there is another global financial system implosion – Macquarie has demonstrated it can survive and is better prepared to cope with another shockwave than it was in 2008, when its business model was leveraged to growth."

Yesterday's rosy inflation data won the Reserve Bank some familiar praise. At Fairfax, Ian Verrender says the central bank's governor, Glenn Stevens, "has emerged with his reputation firmly intact," while CBD columnist Scott Rochfort takes "safe hands" comments even further, relaying a story about Stevens literally being a very good driver.

Rates, they both say, should be on hold for now.

The Herald Sun's Terry McCrann agrees, but not because of the latest local data. He says Australia's rates fate rests in the hands of Europe, the US and China.

Finally, The Australian Financial Review's Alan Mitchell warns Australia must make some difficult decisions if it is to keep inflation low, which necessarily involves keeping down labour costs.

"…while wages growth has slowed, the big fall in labour costs is due mainly to a surge in labour productivity, which is thought to be largely cyclical, hence temporary. … Sustained improvements in productivity growth build up much more slowly, as a result of processes such as the painful structural change under way in the manufacturing sector. As less efficient producers close and their employees find work with more productive businesses, average labour productivity rises. As the Treasurer certainly knows, the hard decisions necessary to keep inflation low start with doing nothing to stop this process of structural change."