UPDATE 1-Qantas won't float frequent flyer unit this year-CEO

* CEO says market still not right for frequent flyer IPO

* No need to raise fresh funds

* Qantas managing cash tightly (For more stories from the IATA meeting, click [ID:nSP479878])

By Jean Yoon

KUALA LUMPUR, June 9 (Reuters) - Australia's Qantas Airways (QAN.AX) said on Tuesday it has no plans to float its $2 billion frequent flyer programme this year despite more stable market conditions, and said it saw no need to raise more capital.

"It's not on the agenda for this year," Chief Executive Alan Joyce told Reuters, when asked about the possible IPO of the frequent flyer scheme.

"It's indefinitely off. The market has not recovered to the level where an IPO will create value," he said on the sidelines of the annual meeting of the International Air Transport Association in Kuala Lumpur.

Qantas shelved the proposal to spin off the Frequent Flyer loyalty scheme last September due to turbulent market conditions. Industry analysts have previously valued the unit at anywhere between A$1 billion and A$3 billion ($789 million-$2.37 billion).

The scheme makes money by selling frequent-flyer points to third parties such as credit-card firms which then use the points as rewards in their own loyalty programmes. Many points are sold but never used, delivering windfall profits for the scheme.

Qantas and other airlines have cut capacity and jobs in response to a slide in profits, rising fuel prices and weak demand, made worse by the recent outbreak of the H1N1 flu virus.

IATA forecast global airlines could lose $9 billion this year, nearly double its estimate of just three months ago. [ID:nN04193349]

Shares in Qantas were 0.9 percent lower at A$2.17 at 0335 GMT, compared with a broader Australian index .AXJO down 0.3 percent.

Joyce also said the carrier had no plan to raise more funds after it raised A$500 million by selling new shares in February and there had been recent market talk that Qantas might need to come back to market again.

"We are managing our cash tightly. We don't see any need to raise more," he said. ($1=1.268 Australian Dollar) (Editing by Lincoln Feast)