Pilots to fight for Qantas
Nunc est bibendum
Thread Starter
Pilots to fight for Qantas
Presented from the Australian.
Interesting times. 
Pilots to fight for Qantas
Steve Creedy and Brad Norington
December 18, 2006
QANTAS pilots are considering a plan to personally invest $50,000 each as part of a "blocking stake" to stop the airline's $11 billion sale to a private equity consortium backed by Macquarie Bank.
The stake by 2500 pilots would form part of a union campaign to encourage shareholders to reject the $5.60 a share offer from the consortium, Airline Partners Australia, to buy Qantas and turn it into a private equity company.
Unions are deeply worried that the bidding consortium plans to slash jobs, sell assets, cut regional routes and send maintenance work offshore to pay off debt, if the sale to a private investment fund is successful.
Australian and International Pilots Association president Ian Woods said yesterday Qantas's 2500 pilots may be prepared to invest in 1 per cent of the stock -- worth about $110 million -- if enough shareholders were willing to hang on to their investments to block the bid.
The consortium bidding for Qantas has said the deal will not go through unless it acquires the 90 per cent of shares necessary to force a compulsory acquisition of the other 10 per cent.
"It's an option that the pilots would consider, and it may well be in their long-term interests, but not until the 8 or 9 per cent (of people not willing to sell) is forthcoming," Mr Woods said.
Mr Woods said thwarting the Qantas sale deal could also depend on the support of union-friendly superannuation interests.
Unions have launched a campaign urging shareholders to ignore the windfall from the $11 billion bid for Qantas, with the ACTU trying to persuade shareholders the deal is bad for the public and the airline.
ACTU airlines spokesman Richard Watts said unions did not regard the sale as a good transaction in the interest of shareholders, the public or the airline.
Mr Watts said the ACTU would encourage people not to sell.
"Essentially, what we're saying is Qantas is a good long-term investment," he said. "They might make a few bucks if they sell now, depending on when they bought, but they will forgo a good long-term investment."
Mr Watts said the campaign would also focus on the potential impact of the heavy level of debt the takeover would involve on the economy as a whole.
The Qantas board on Thursday approved a $5.60-per-share bid for the airline, saying it provided shareholders with a 33 per cent premium on the November 6 closing price and better reflected the carrier's true value.
Australian Competition and Consumer Commission chairman Graeme Samuel said yesterday he would investigate concerns raised about the bidding consortium holding an interest in Sydney Airports Corporation at the same time as it potentially owned Qantas.
Mr Samuel told The Australian the ACCC was conducting a "normal process" to be concluded by February 22, but market concerns about competition demanded a rigorous review.
"This is a very high-profile takeover," he said. "Our focus is on competition, despite concerns others have raised about foreign ownership."
The bidding consortium claims it will be "business as usual" at Qantas following the sale and that it has no plans to break up the airline, cut regional routes or send maintenance jobs offshore.
But analysts are already speculating on potential asset spin-offs.
JP Morgan's Matt Crowe estimated that more than $2.5 billion worth of assets could be sold with a low degree of difficulty.
They include the airline's terminals, frequent flyer program, catering unit and holidays business.
Deputy Prime Minister and Transport Minister Mark Vaile yesterday gave no indication about whether the Qantas sale would get government approval.
Mr Vaile said the Government was keen to examine the competition aspects of the takeover, including any conflict of interest for Macquarie Bank, given its airport interests.
"Obviously, we will watch that very closely," he said.
Mr Vaile also ridiculed suggestions Qantas would wind back its popular frequent flyer program. "Commercially, if the new owners wanted to start dismantling that, it would be commercial madness," he said.
"It's not my decision, but you invest $11 billion into something, the strength of which is the brand -- Qantas and One World."
Australian Workers Union national secretary Bill Shorten called on the consortium to reveal its plans for the airline and said Treasurer Peter Costello should ask serious questions about the sale.
Mr Shorten said he feared maintenance work would go offshore and cheaper pilots could be sought outside Australia in a bid to cut costs and pay off debt.
Mr Woods admitted that his "blocking stake" proposal was a risky strategy, saying it would be difficult for Qantas investors to knock back the existing deal.
But he said Qantas had provided reliable revenue streams and there could be people prepared to take a longer-term view.
The pilots' union is also attempting to talk to the proposed private equity owners about its concerns and ways its members could take a role in the new structure.
The pilots' enterprise agreements are currently open, meaning they are able to take protected industrial action.
They already have concerns about plans by management to concentrate on low-cost carrier Jetstar, a move they believe will come at their expense by reducing wages and conditions.
Additional reporting: Steve Lewis
Steve Creedy and Brad Norington
December 18, 2006
QANTAS pilots are considering a plan to personally invest $50,000 each as part of a "blocking stake" to stop the airline's $11 billion sale to a private equity consortium backed by Macquarie Bank.
The stake by 2500 pilots would form part of a union campaign to encourage shareholders to reject the $5.60 a share offer from the consortium, Airline Partners Australia, to buy Qantas and turn it into a private equity company.
Unions are deeply worried that the bidding consortium plans to slash jobs, sell assets, cut regional routes and send maintenance work offshore to pay off debt, if the sale to a private investment fund is successful.
Australian and International Pilots Association president Ian Woods said yesterday Qantas's 2500 pilots may be prepared to invest in 1 per cent of the stock -- worth about $110 million -- if enough shareholders were willing to hang on to their investments to block the bid.
The consortium bidding for Qantas has said the deal will not go through unless it acquires the 90 per cent of shares necessary to force a compulsory acquisition of the other 10 per cent.
"It's an option that the pilots would consider, and it may well be in their long-term interests, but not until the 8 or 9 per cent (of people not willing to sell) is forthcoming," Mr Woods said.
Mr Woods said thwarting the Qantas sale deal could also depend on the support of union-friendly superannuation interests.
Unions have launched a campaign urging shareholders to ignore the windfall from the $11 billion bid for Qantas, with the ACTU trying to persuade shareholders the deal is bad for the public and the airline.
ACTU airlines spokesman Richard Watts said unions did not regard the sale as a good transaction in the interest of shareholders, the public or the airline.
Mr Watts said the ACTU would encourage people not to sell.
"Essentially, what we're saying is Qantas is a good long-term investment," he said. "They might make a few bucks if they sell now, depending on when they bought, but they will forgo a good long-term investment."
Mr Watts said the campaign would also focus on the potential impact of the heavy level of debt the takeover would involve on the economy as a whole.
The Qantas board on Thursday approved a $5.60-per-share bid for the airline, saying it provided shareholders with a 33 per cent premium on the November 6 closing price and better reflected the carrier's true value.
Australian Competition and Consumer Commission chairman Graeme Samuel said yesterday he would investigate concerns raised about the bidding consortium holding an interest in Sydney Airports Corporation at the same time as it potentially owned Qantas.
Mr Samuel told The Australian the ACCC was conducting a "normal process" to be concluded by February 22, but market concerns about competition demanded a rigorous review.
"This is a very high-profile takeover," he said. "Our focus is on competition, despite concerns others have raised about foreign ownership."
The bidding consortium claims it will be "business as usual" at Qantas following the sale and that it has no plans to break up the airline, cut regional routes or send maintenance jobs offshore.
But analysts are already speculating on potential asset spin-offs.
JP Morgan's Matt Crowe estimated that more than $2.5 billion worth of assets could be sold with a low degree of difficulty.
They include the airline's terminals, frequent flyer program, catering unit and holidays business.
Deputy Prime Minister and Transport Minister Mark Vaile yesterday gave no indication about whether the Qantas sale would get government approval.
Mr Vaile said the Government was keen to examine the competition aspects of the takeover, including any conflict of interest for Macquarie Bank, given its airport interests.
"Obviously, we will watch that very closely," he said.
Mr Vaile also ridiculed suggestions Qantas would wind back its popular frequent flyer program. "Commercially, if the new owners wanted to start dismantling that, it would be commercial madness," he said.
"It's not my decision, but you invest $11 billion into something, the strength of which is the brand -- Qantas and One World."
Australian Workers Union national secretary Bill Shorten called on the consortium to reveal its plans for the airline and said Treasurer Peter Costello should ask serious questions about the sale.
Mr Shorten said he feared maintenance work would go offshore and cheaper pilots could be sought outside Australia in a bid to cut costs and pay off debt.
Mr Woods admitted that his "blocking stake" proposal was a risky strategy, saying it would be difficult for Qantas investors to knock back the existing deal.
But he said Qantas had provided reliable revenue streams and there could be people prepared to take a longer-term view.
The pilots' union is also attempting to talk to the proposed private equity owners about its concerns and ways its members could take a role in the new structure.
The pilots' enterprise agreements are currently open, meaning they are able to take protected industrial action.
They already have concerns about plans by management to concentrate on low-cost carrier Jetstar, a move they believe will come at their expense by reducing wages and conditions.
Additional reporting: Steve Lewis
Ian Woods is correct when he says the strategy is risky, especially if he is being quoted accurately. I get nervous when I see the name Brad Norrington the author of Sky Pirates.
Nunc est bibendum
Thread Starter
Actually now that I think this through a little more it starts to make a little more sense. The strategy that Ian is persuing may be spot on the money. This may in fact turn out to be a master stroke. 
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The quote should have been "Cheaper management could be sought outside Australia"
as well as "cheaper Journalists could be sourced outside Australia" after reading some of the rubbish that passes for journalistic integrity
as well as "cheaper Journalists could be sourced outside Australia" after reading some of the rubbish that passes for journalistic integrity
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I'll have some more of what you guys are having.
Sorry Guys,
Either it is an outstanding wind-up or mathematics has changed in the last 20 years.
I fear it just highlights how far out of touch the union has become.
I'd love to see the posts if an investment advisor told you not to pay $3.50 for the shares but wait till you could pay $5.60.
As usual the union is reactive not active. The world has changed.
Gotta fly.
Either it is an outstanding wind-up or mathematics has changed in the last 20 years.
I fear it just highlights how far out of touch the union has become.
I'd love to see the posts if an investment advisor told you not to pay $3.50 for the shares but wait till you could pay $5.60.
As usual the union is reactive not active. The world has changed.
Gotta fly.
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Jeez, 5 minutes ago the pilots were for the buyout.
Guess they went to the table and found there wasn't a chair for them!
They must be starting to think they'll be standing outside forever!
Guess they went to the table and found there wasn't a chair for them!
They must be starting to think they'll be standing outside forever!
Ok so all the QF pilots put 50k in and block the sale. If the bid failed wouldn't the share price drop to where it was previously leaving everyone a lot of $$$ out of pocket?
I've got a feeling this idea wasn't well thought through.
I've got a feeling this idea wasn't well thought through.
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I am an investor/mum dad/ whatever, and I have 2-10000 ( or more ) QF shares which I paid $2.50 odd for 4-5 years ago, until recently they peaked at around $3.90, I am now being offered $5.60.......................................pretty difficult decision 
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Iv got a 1,000 shares that means mcquary has to buy over 9,000 to neutralise me. i aint selling i dont care what they worth.all loses are tax ductable vote with your money.
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Talk about calling the kettle black. To me it is the same as paying for an endorsement. Things have changed in the industry. If you want a job you buy it whether it be a well known airline or not!
Evertonian
Qantas had provided reliable revenue streams and there could be people prepared to take a longer-term view
Sure, Qantas is making money, but that isn't solely due to the business decisions of the board. Their number one competitor going down saw them consolidate their position before DJ could be a serious challenge to them & their most lucrative market is still relatively well protected. SARS, Gulf conflicts, oil prices...how can an airline be a reliable revenue source?
Also, it would be naive to think that they couldn't dilute your investment. This is how Abeles & Murdoch killed off any similar types of buybacks at Ansett. Shares were diluted as 100 shares = 1 share and this pretty much killed off the rest of the shareholders.
Be vewy, vewy careful chaps....
Nunc est bibendum
Thread Starter
Everyone should also keep in mind that this is just one of the shots in an ongoing battle. It's certainly not the only option going around and this is just part of a bigger scenario. Those who see this as a 'Hail Mary' type finale are well short of the mark I suspect.
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Sky Pirates?
B772,
Speaking of Sky Pirates (p247)
Keg,
Battle? Debacle? Who can tell? Looks much the same to me.
Ian Woods is correct when he says the strategy is risky, especially if he is being quoted accurately. I get nervous when I see the name Brad Norrington the author of Sky Pirates.
He (McCarthy) could not however, simply crash through the machinations of political and economic power in Australia and naively hope to win. McCarthy had acted as if the federation were entering an even match in which some sort of Queensbury rules applied. He soon found the world is not a fair place.
this is just one of the shots in an ongoing battle.
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Lucius,
Interesting post considering Woods wrote in his recent newsletter
Brace, Brace, Brace.
Interesting post considering Woods wrote in his recent newsletter
Whilst I remain hopeful that Marquis of Queensbury rules will prevail throughout 2007, and negotiations will be conducted in good faith, the unilateral imposition of Company imposed EBA deadlines almost certainly means that our employer wants to test our willingness to back our beliefs with substance.
That quote is an insult to Phillipino, New Zealand and probably even Kazak pilots. The cheapest pilots will be the next generation of Australians!
Good luck to those at QF.
I have a friend who works at Macquarie- he calls me an overpaid bus driver. He makes near a million dollars a year.
With the greatest of respect, why do pilots continue to always shoot themselves in the foot by "fighting when there is no need to? Remember Ansett? Remember a certain organisation?
Why on earth would you possibly try and frustrate the buyout? I would have thought, notwithstanding the famous Dixon plan, that you job security and stability could only improve. One of the backers of the project (from texas pacific) has airline expereince in the management of Continental. Why not ask them what life is like?
My guess would be that the new owners will focus on a rather different agenda than baiting flight,and cabin crew and engineers, that is if they wish to protect their investment. My guess would be that their sights are set on management numbers - and managers.
Why on earth would you possibly try and frustrate the buyout? I would have thought, notwithstanding the famous Dixon plan, that you job security and stability could only improve. One of the backers of the project (from texas pacific) has airline expereince in the management of Continental. Why not ask them what life is like?
My guess would be that the new owners will focus on a rather different agenda than baiting flight,and cabin crew and engineers, that is if they wish to protect their investment. My guess would be that their sights are set on management numbers - and managers.