Qantas is continuing with plans to establish a premium Asian airline despite its own gloomy outlook for the global economy.

Already under pressure from its loss-making international operations, Qantas faces significant challenges in the years ahead because of economic woes in Europe and the United States, chief executive Alan Joyce said on Monday.

“We all know that the global economic prognosis is gloomy,” he told an investor briefing.

“Even with the insulation of a strong Australian resource based economy, we will not be fully immune from the global forces that are at work.

“So we expect real challenges over the next five years.”

There has been speculation in recent weeks that economic and market turmoil may cause Qantas to delay plans to establish a premium airline based in Asia.

The plan is part of a five-year turnaround for its international arm, alongside changes to its long-haul flying schedule and fleet renewal.

But Mr Joyce said on Monday the aim remains to invest in a premium airline based in Asia.

“Talks continue and it remains premature to make any announcements at this stage,” he said.

“Our aim is to position ourselves within the South East Asian marketplace in advance of planned aviation liberalisation.

“In five years we plan to have a hub in the world’s fastest growing aviation region, feeding traffic into both our Qantas and Jetstar networks.

“This is how we will end the disadvantage of being an end-of-the-line carrier.”

Domestic bookings have recovered to normal levels following the grounding of the Qantas fleet in October in reaction to disputes with three unions, Mr Joyce said.

International bookings are recovering at a slower rate for the period through to January, but bookings after January were in line with levels prior to the industrial action, he said.

The damage to the Qantas brand has proved to be temporary, Mr Joyce said.

“I say temporary because all the signs are that the damage is neither extensive nor permanent,” he said.

“To the contrary, we’ve had overwhelming support from our most valued frequent flyers and the business community.”

Mr Joyce said he was confident the outcomes of arbitration with the three unions will be reasonable and will exclude “extreme” claims that threatened its transformation plans.

Qantas shares were down 0.25 of a cent at $1.5875 at 1339 AEDT Monday.