SYDNEY - Australia's Qantas Airways said on Monday that talks on establishing a premium airline in Asia were continuing amid competitive challenges facing the company in the years ahead.

Qantas Chief Executive Alan Joyce told an investor briefing in Sydney on Monday that Qantas would see further competitive pressures from Middle Eastern and Chinese carriers in international markets in the next five years.

"At home we will see continuing attempts to erode our domestic dominance," Joyce said.

The Qantas boss said the airline would continue its focus on lowering costs and improving productivity.

"We have announced our plans to invest in a premium airline based in Asia. Talks continue, and it remains premature to make any announcements at this stage," Joyce told the company's shareholders.

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

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

"International forward bookings are recovering, although at a slower rate for the period through to January. Beyond January, forward bookings are essentially in line with levels prior to the industrial action," he said.

Joyce said Qantas was confident the Fair Work outcomes of arbitration with the three unions would be reasonable.