Qantas needs takeover to survive - CAPA report
An interesting article about QANTAS's future from the Centre for Asia Pacific Aviation . . . as reported by today's Airline Transport World.
ATW Daily News
CAPA: Qantas needs takeover to survive
Friday January 12, 2007
The ambitious $11.1 billion ($8.64 billion) buyout bid from Airline Partners Australia to take Qantas private will succeed, according to the Sydney-based Centre for Asia Pacific Aviation, if only because the consequences of failure "are too grotesque to imagine."
Speaking yesterday to ATWOnline, Executive Chairman Peter Harbison said, "If the deal is knocked back, there would be a massive loss of confidence and the share market would bail out of the stock, sending the share price below last year's lows."
He warned that Qantas is a child of regulation and its strength will wither as liberalization increases. "This is an international trend and beyond the control of the Australian government, even if it wanted to prevent change. In the face of this evolutionary process, Qantas would be lucky to survive another 10 years in its current form," Harbison predicted. "It would contract into a domestic airline and eventually be taken over by one of the post-2010 multinational airlines."
He believes the Australian Stock Exchange, conditioned to quarterly reporting, does not understand the long-term nature of the airline market or Qantas's international profile. That lack of understanding was reflected this week in a poll that found a majority of Australians did not want the buyout to proceed because they falsely believed Qantas is either government-controlled or 100% Australian-owned. ATWOnline also discovered that some Qantas employees did not understand that the airline already is 49% foreign owned.
"The [APA] investors may be money-hungry, but stupid they are not. They see the international emerging opportunities in much the same light as Qantas CEO Geoff Dixon does," Harbison said.
Yesterday Qantas shares had their busiest day since 2004 (when British Airways sold its 18.25% stake), with more than 100 million changing hands as investors seemed happy to bail out at A$5.29 rather than wait several months for the deal to be approved and getting A$5.60. The airline's largest single shareholder, US-based fund manager Capital Group, reduced its stake to 10.4% from 11.6% between Dec. 28 and Jan. 4, according to The Australian.
by Geoffrey Thomas