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Conflict concern over Qantas boss stakes
Richard Gluyas
November 27, 2006
REPORTS that Qantas management could take a 1 per cent stake in any takeover of the national airline have aroused concern among investors about possible conflicts.
A consortium featuring Macquarie Bank, US-based Texas Pacific Group and Canada's Onex is believed to be preparing to lodge a bid valuing Qantas at up to $11 billion.
While the carrier has said the approach is confidential, incomplete and under investigation by the company, the consortium is already conducting due diligence ahead of putting a proposal to the board.
There have been reports, furthermore, that Qantas management, including chief executive Geoff Dixon, could get around 1 per cent of the airline, worth $110 million, as an incentive.
Mr Dixon has played down the reports, releasing a brief statement on Friday saying he had had no discussions with any member of the consortium on his "future role, remuneration or equity in any new company".
This was in line with protocols set up by the Qantas board, he said.
Australian Shareholders Association chairman Stephen Matthews said there was a question surrounding the sufficiency of any protocols, given Mr Dixon's critical role.
"The CEO is key to both sides -- the bidders as well as the board, some of whom might want Qantas to remain a listed company," Mr Matthews said.
"But Mr Dixon might also have an interest in getting Qantas out of the public spotlight to achieve some of his targets in cost reduction. It's unclear how that's all going to be dealt with."
If the takeover bid proceeds and is successful, Qantas is expected to take a more aggressive approach to reducing costs, including changes to the working conditions of staff.
As a legacy airline, pay and conditions for Qantas workers are superior to those at Jetstar, the airline's no-frills start-up.
One industry expert, however, predicted Qantas's heavily unionised workforce would fight a concerted battle against reduced pay and conditions, regardless of whether the airline was in public or private ownership.