Wed "West Australian"
Qantas in fresh talks to lift cap
By Geoffrey Thomas
QANTAS Airways has launched a fresh bid to overturn laws restricting foreign ownership of the airline to 49 per cent.
Chief executive Geoff Dixon confirmed yesterday that talks were under way with the Federal Government over the issue, which Qantas says is hampering its ability to raise foreign capital to expand.
Overseas analysts suggest Qantas shares are the most undervalued in the industry and that the stock would soar to over $6 if listed on foreign exchanges.
Qantas applied last year for the law to be changed, but the request was rejected on so-called national interest grounds.
But analysts say the Government's policy is unfair because it allows foreign-owned airlines to compete on domestic routes and is set to allow Singapore Airlines to compete on most of Qantas' overseas routes from Australia to the US and Japan.
Transport Minister John Anderson has said that Qantas' arguments are neither "deep enough nor strong enough" to warrant change.
He claims Australian capital market pockets are deep enough to provide all the money Qantas needs for expansion, but analysts disagree.
They say it is more costly, and potentially harder, for Qantas to raise money for its future growth. They say Qantas needs to raise $2.5 billion annually until 2005 for new aircraft, upgraded lounges and provide greater in-flight services.
Qantas chairman Margaret Jackson has said the airline had a strong case for the law to be changed - a view supported by the business community.
Ms Jackson also claimed Qantas' case had been unfairly influenced by the debate about the Government selling the rest of its Telstra Corp stake.
"I fail to see how the national interest will be advanced by denying Qantas the opportunity to access much needed equity capital on a cost-effective basis in order to invest, grow and compete on the lopsided, harsh and unforgiving international playing field," she said.
Peter Harbison, of the Centre for Asia-Pacific Aviation, agreed and claimed that non-aviation issues, such as the Telstra sale, were the reasons for the rejection.
However, he said if the Government allowed Qantas to raise its ownership cap, it might be required to retain its headquarters in Australia and have Australians account for the majority of board members.
There would also be limits on the amount of stock any one institution or airline could own.
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