Hold reins on Qantas or let it run free?

[Wirraway]

Mon "Melbourne Age" 12/8/02

Hold ownership reins on Qantas or let it run free?
By Mark Todd
Sydney
August 12 2002

Federal cabinet will meet tomorrow in Cairns to discuss whether to grant Qantas chief executive Geoff Dixon his wish to lift the cap on the airline's foreign shareholding.

Any decision could have a substantial impact on Qantas' share price: Mr Dixon claims that limiting foreign investors to 49 per cent has held the company back and even put in jeopardy plans to buy aircraft worth $11 billion. Cabinet could announce a decision as early as Tuesday, but may also elect to hold the matter over.

The issue has generated intense debate within the Federal Government, with the Minister for Small Business and Tourism, Joe Hockey, opposing the relaxation of the Qantas Sale Act on the grounds that regional services may suffer. The Opposition, however, has backed the move as necessary to ensure Qantas remains competitive.

Prime Minister John Howard and Treasurer Peter Costello have already considered a submission that the Minister for Transport, John Anderson, will take to Cabinet.

"Qantas has put a strong commercial case but there are other factors, such as the national interest, that Cabinet will consider," said a source.

Analysts suggest the removal of the limit will reduce Qantas' cost of capital, which will be crucial as the airline embarks on a $13 billion capital spending program over the next 10 years to upgrade its fleet.

Retention of the limit will put in doubt another $11 billion of spending on opportunities that management has identified.

The change would also make it easier for Qantas to fund projects such as its acquisition of 25 per cent of Air New Zealand.

Across the Tasman opposition to the sale is mounting with a group of NZ business identities, including Fonterra chief executive Craig Norgate, Sky TV founder Craig Heatley and Warehouse Group's Stephen Tindall, campaigning against the sale to Qantas.
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Mon "The Australian"

Cabinet to reject foreign Qantas
By Steve Lewis
August 12, 2002

THE future ownership of Qantas, Australia's most valued corporate icon, is due to be discussed by the federal cabinet tomorrow, when senior ministers are expected to rebuff the airline's pitch to become majority foreign owned.

As revealed by The Australian last week, senior ministers are deeply concerned over the political ramifications of lifting the 49 per cent foreign ownership cap applying to Qantas while the Government is attempting to win community support for the full sale of Telstra.

Several ministers, including Industry Minister Ian Macfarlane and Tourism Minister Joe Hockey, have raised concerns that a majority foreign-owned Qantas could reduce its commitment to less-profitable regional routes.

It is understood several influential departments, including that of Prime Minister and Cabinet, are backing the status quo -- despite the Qantas argument that it needs access to more foreign capital to reduce its financing costs.

John Howard will take his cabinet to the far north Queensland centre of Cairns for tomorrow's meeting, which is also expected to discuss the problems of the sugar industry.