View Full Version : Singapore Air/Qantas/Stake: Talks To Remove Foreign Cap

25th Feb 2003, 17:16
Dow Jones

Tuesday February 25, 3:48 PM

Singapore Air/Qantas/Stake: Talks To Remove Foreign Cap

SINGAPORE (Dow Jones)--Singapore Airlines Ltd. Tuesday said it isn't in any talks which may lead to the possible acquisition of a stake in Australia's Qantas Airways Ltd.

"We have not held any discussions with Qantas about taking a stake in that airline," an SIA spokesman said in response to a query from Dow Jones Newswires.

Qantas Chief Executive Geoff Dixon said earlier Tuesday that the airline's executives are talking with the Australian government again about removing the 49% foreign investment cap on its share register.

Pic: Singapore Airlines 9V-SRC 777-200 airbourne from rwy 01 BNE.
Photo: Wirraway (Ian Sharp)


25th Feb 2003, 19:02
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.


Al E. Vator
26th Feb 2003, 00:49
Peter Harbison also said that "It was a matter of when, not if, Singapore Airlines would set up an Australian domestic carrier".
Why does anybody quote this buffoon?

26th Feb 2003, 17:51
Moreover, why is it always someone else taking a bite of Qantas?

I prefer this approach:

Qantas hungry for foreign airline stakes
By Geoffrey Thomas
February 24 2003

Qantas has flagged that it could be on the takeover trail if the Iraqi war erupts and the conflict brings airlines to their knees.

Mr Dixon warned that the Iraqi conflict would lead to consolidation in the industry and that Qantas would be well placed to take advantage of it.

Airline analysts said yesterday Qantas could be targeting a 25 per cent stake in Oneworld alliance partner American Airlines.

"If there was a war in Iraq, I believe we will have failures of airlines and the inevitable consolidation that must be necessary in an industry that has such high people and capital costs will happen," Mr Dixon told Nine's Business Sunday program.

He said the aviation industry was in chaos, as hundreds of thousands of people were losing their jobs, planes were being stored, US airlines were insolvent and there was trouble in Europe. Qantas would be poised to take advantage of the situation after announcing a record interim profit of $352.5 million on Thursday.

"Perhaps we will be in the position to be able to look at whether there is potential opportunities out there - not people looking at us whether we are a potential opportunity," he said.

For some time Qantas has been eyeing equity buys in foreign airlines and could take as much as a 25 per cent equity in American Airlines under current US legislation.

In the past two years, American Airlines' stock has fallen from $US40 to just $US2.91 on Friday. American has 155 million shares on issue and a 25 per cent stake would cost Qantas $US113 million ($191.5 million) - a fraction of what American Airlines is worth in normal times.

However, any such investment would only be struck after American had renegotiated with its unions for substantial pay cuts more in line with industry standards for lower cost airlines such as Southwest of the US.

The West Australian (but copied out of the 24/2 SMH)