MERGED: Alan's still not happy......
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You’re comparing apples with oranges buddy. VA ownership will be 23-26% NZ, 20% SQ and 20% EY. Between them they will own 63-66% of VA. If you include Richard Branson’s Virgin Group then that is 73-76%. In the case of J* Hong Kong it will be 33% owned by the QF group and 33% by MU for a 66% foreign ownership. I find it incredibly hypocritical of you and your boss AJ assuming you work for QF or JQ to think it is OK to try and pull this off in Hong Kong when it is a clear violation of Hong Kong’s constitution, the Basic Law when the fact is that VA’s structure 100% complies with Australia’s foreign ownership laws governing domestic and international airlines based in Australia.
Couple of points.
HK aviation law is different to Australia - there is no 50% threshold.
Otherwise Cathay Pacific would have no international routes - having historically been >50% owned by the British company Swire Pacific, and now something like 40% Swire (British) and 30% Air China (China) with a v/v share in Air China. So the proposed Jetstar HK has lower foreign ownership (at 66%) than CX. HK law as I basically understand it comes down more to management headquarters, and board location (ie. a control test). Whether Jetstar HK meets this due to the shared services provided by Australia I don't know.
As for VA.
Say I buy a share of the listed Virgin Australia today?
Do I own a piece of the international routes??
- Theoretically no- as the international arm has been grandfathered under the VAIH stucture (per the 23-Feb-12 announcement)
But,
- "both the domestic and international businesses will continue to operate as an integrated airline under one brand."
- the Annual Reports and statements treat Virgin Australia as a single entity (I believe because it is controlled by this entity)
- there are no separate financial statements for VAIH.
So assuming that VAIH (like QFi) is losing money (and probably not unlikely given yields on Transpac routes), if I buy a share today - VA is reporting financials that are not consistent with what I own, the management team is spending time and effort on something I don't own, assuming it is loss making my company is making loans to an entity in which I won't get any benefit.
I have no problem with the foreign airlines owning such a high %ge of Virgin Domestic, but Virgin Australia International should be properly separated, properly reported and properly accounted for, and people should be able to buy shares in it (subject to the 50% cap)
"Should" don't come into it old mate.
It's legal and that's all that matters. Unless the law (or QSA) changes, the playing field will remain somewhat tilted.
And isn't that what good businesses do?......exploit favourable conditions to their own advantage whenever possible.
It's legal and that's all that matters. Unless the law (or QSA) changes, the playing field will remain somewhat tilted.
And isn't that what good businesses do?......exploit favourable conditions to their own advantage whenever possible.
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‘‘There is a lot at stake but I have absolutely no doubt that the politicians will see sense and reframe the policy framework to make sure this is a level playing field again.’’
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However, Mr Joyce conceded last week that there was no appetite in Canberra for changes to the Qantas Sale Act, which limits foreign ownership in the national flag carrier.
Qantas wants the Foreign Investment Review Board to review the level of foreign investment in Virgin, and consider the prospect of its largest shareholders taking it private.
Depending on the take up of new shares, Virgin’s latest capital raising could allow its three main shareholders – Etihad, Singapore Airlines and Air New Zealand - to increase their combined stake to as much as 68 per cent.
Richard Branson’s Virgin Group also has a 10 per cent stake.
Qantas has also demanded the federal government consider whether Virgin is complying with laws which allow it to gain access to air routes out of Australia. Under the Air Navigation Act, an airline has to be 51 per cent Australian owned in order to gain access to these routes under bilateral air rights agreements.
Mr Joyce wants the government to examine whether it was a ‘‘backdoor way for Abu Dhabi, for Singapore, for New Zealand to get access to what should be rights that are available for Australian carriers’’. Etihad is based in Abu Dhabi in the United Arab Emirates.
‘‘The Australian icon cannot compete with two hands tied behind its back, and the policy settings need to be adjusted,’’ he said.
Mr Joyce likened the situation to a soccer game in which Qantas was 10-nil up before Virgin had called three other teams onto the field ‘‘because they can’t beat us’’.
‘‘We need a level playing field for the Qantas Group to have a future. They do their heavy maintenance offshore. They don’t have these investments that we do in this country.’’
However, Virgin has accused Qantas of ‘‘an orchestrated media campaign regarding this capital raising’’, and threatened to take legal action against Mr Joyce.
Mr Joyce raised his concerns directly with federal Transport Minister Warren Truss and Labor’s transport spokesman Anthony Albanese in Canberra last week. Neither side of politics has been willing to be publicly drawn publicly into the stoush.
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However, Mr Joyce conceded last week that there was no appetite in Canberra for changes to the Qantas Sale Act, which limits foreign ownership in the national flag carrier.
Qantas wants the Foreign Investment Review Board to review the level of foreign investment in Virgin, and consider the prospect of its largest shareholders taking it private.
Depending on the take up of new shares, Virgin’s latest capital raising could allow its three main shareholders – Etihad, Singapore Airlines and Air New Zealand - to increase their combined stake to as much as 68 per cent.
Richard Branson’s Virgin Group also has a 10 per cent stake.
Qantas has also demanded the federal government consider whether Virgin is complying with laws which allow it to gain access to air routes out of Australia. Under the Air Navigation Act, an airline has to be 51 per cent Australian owned in order to gain access to these routes under bilateral air rights agreements.
Mr Joyce wants the government to examine whether it was a ‘‘backdoor way for Abu Dhabi, for Singapore, for New Zealand to get access to what should be rights that are available for Australian carriers’’. Etihad is based in Abu Dhabi in the United Arab Emirates.
‘‘The Australian icon cannot compete with two hands tied behind its back, and the policy settings need to be adjusted,’’ he said.
Mr Joyce likened the situation to a soccer game in which Qantas was 10-nil up before Virgin had called three other teams onto the field ‘‘because they can’t beat us’’.
‘‘We need a level playing field for the Qantas Group to have a future. They do their heavy maintenance offshore. They don’t have these investments that we do in this country.’’
However, Virgin has accused Qantas of ‘‘an orchestrated media campaign regarding this capital raising’’, and threatened to take legal action against Mr Joyce.
Mr Joyce raised his concerns directly with federal Transport Minister Warren Truss and Labor’s transport spokesman Anthony Albanese in Canberra last week. Neither side of politics has been willing to be publicly drawn publicly into the stoush.
Last edited by TIMA9X; 30th Nov 2013 at 16:02.
I think the avenue Qantas are chasing is what happens if the retail side of the Virgin placement is not fully taken up. The Foreign Airlines would then be able to take up the shortfall.
As far as I can tell, Etihad has FIRB approval to 19.9%. If they take up the unsubscribed retail placement, their stake could go to 22.2%.
Do they have FIRB approval for 22.2% - I can't find anything. So wouldn't they need FIRB approval?
I presume this is why Qantas is making such a noise, they don't want the FIRB to approve any further increases. this is the only avenue they have to try and stop Virgin.
The last thing Qantas would want is for Virgin to go private as Virgin would then no longer be subject to the raft disclosure requirements as required for public companies.
As far as I can tell, Etihad has FIRB approval to 19.9%. If they take up the unsubscribed retail placement, their stake could go to 22.2%.
Do they have FIRB approval for 22.2% - I can't find anything. So wouldn't they need FIRB approval?
I presume this is why Qantas is making such a noise, they don't want the FIRB to approve any further increases. this is the only avenue they have to try and stop Virgin.
The last thing Qantas would want is for Virgin to go private as Virgin would then no longer be subject to the raft disclosure requirements as required for public companies.
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wrong Swire Pacific is based in Hong Kong and listed in Hong Kong- not in England so majority of CX is HK owned.
Jetstar HK is minority owned by a Hong Kong company
all QF has to do is set up a subsidiary investment firm in HK that is HK based and ensure more than 50% is HKG owned like it is for CX 25% Public and 44% Hong Kong based and run Swire Pacific( which in turn is majority HK owned- not Swire owned)
yes the 49% rule does apply which is exactly why Hainan did not take more than 49% of HK express -else HK express would not comply with law.
so the situation is fairly similar. Virgin should continue to provide competition to QF and give them a stronger taste of their own Medicine
Jetstar HK is minority owned by a Hong Kong company
all QF has to do is set up a subsidiary investment firm in HK that is HK based and ensure more than 50% is HKG owned like it is for CX 25% Public and 44% Hong Kong based and run Swire Pacific( which in turn is majority HK owned- not Swire owned)
yes the 49% rule does apply which is exactly why Hainan did not take more than 49% of HK express -else HK express would not comply with law.
so the situation is fairly similar. Virgin should continue to provide competition to QF and give them a stronger taste of their own Medicine
moa999
As Hong Kong is a SAR of China, “Principal Place of Business” was adopted in the Basic Law rather than 51% ownership because there is technically no such thing as a Hong Kong national. In determining “Principal Place of Business” the Hong Kong SAR government looks not at the proposed airlines “PPoB”, because that is a given, but at the shareholders “PPoB”. The facts are that J* Hong Kong will be 33.3% owned by the Qantas group whose “PPoB” is Australia and is headquartered in Sydney. Another 33.3% will be owned by China Eastern whose “PPoB” is China and is headquartered in Shanghai. Cathay Pacific on the other hand is 45% owned by Swire Pacific which is listed on the Hong Kong Hang Seng Index. It is headquartered at Pacific Place, Central, Hong Kong SAR and has its “PPoB” in Hong Kong. 25% is owned by local individual and institutional investors and Air China owns the remaining 30%. While the Basic Law doesn’t directly state a 51% requirement, the “PPoB” method indirectly does the same thing. Under the “PPoB” measurement, Cathay Pacific is 70% locally owned where J* Hong Kong will be 66.6% foreign owned. It is also worth pointing out that no airline that is/was based in Hong Kong since the handover to China in 1997 has been owned by more than 49% by a foreign airline or company with its “PPoB” outside Hong Kong. There is a reason for this and it is the way the Hong Kong SAR government interprets “The Basic Law”, Chapter V, Section 4.
Under the current structure it has been deemed to comply with the Australian Foreign Ownership Laws of and Australian International Airline. If AJ and Qantas have a problem with it, take it to court. They haven’t done this though because their real motive is having the Qantas Sales Act changed and do what VA has legally just done.
The The
NZ already has permission by the FIRB to raise its stake. As no airline will have control I can’t see a problem for SQ or EY also being granted approval to increase their stake.
Couple of points.
HK aviation law is different to Australia - there is no 50% threshold.
Otherwise Cathay Pacific would have no international routes - having historically been >50% owned by the British company Swire Pacific, and now something like 40% Swire (British) and 30% Air China (China) with a v/v share in Air China. So the proposed Jetstar HK has lower foreign ownership (at 66%) than CX. HK law as I basically understand it comes down more to management headquarters, and board location (ie. a control test). Whether Jetstar HK meets this due to the shared services provided by Australia I don't know.
HK aviation law is different to Australia - there is no 50% threshold.
Otherwise Cathay Pacific would have no international routes - having historically been >50% owned by the British company Swire Pacific, and now something like 40% Swire (British) and 30% Air China (China) with a v/v share in Air China. So the proposed Jetstar HK has lower foreign ownership (at 66%) than CX. HK law as I basically understand it comes down more to management headquarters, and board location (ie. a control test). Whether Jetstar HK meets this due to the shared services provided by Australia I don't know.
I have no problem with the foreign airlines owning such a high %ge of Virgin Domestic, but Virgin Australia International should be properly separated, properly reported and properly accounted for, and people should be able to buy shares in it (subject to the 50% cap)
The The
NZ already has permission by the FIRB to raise its stake. As no airline will have control I can’t see a problem for SQ or EY also being granted approval to increase their stake.
Does anyone know of a big announcement due shortly that is requiring QF to send their managers of corporate security to all corners of the network?
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the abc are reporting tonight that bga has found a sympathetic ear in hockey regarding easing of restrictions to foreign ownership in qf. further, hockey has not ruled out a federal buy in.
shame the cupboard is bare, whatever the chances of that are
shame the cupboard is bare, whatever the chances of that are
Thread Starter
Hockey on the sale bandwagon. Cannot believe he is actually suggesting that QF looks at getting government funding.......
Either it's privatised or not. None of this BS where we privatise a business, people come in at ridiculous salaries bugger it up then we ask the government for a handout.
Either it's a government business or it isn't.
Either it's privatised or not. None of this BS where we privatise a business, people come in at ridiculous salaries bugger it up then we ask the government for a handout.Either it's a government business or it isn't.
The regulation of Qantas is back on the agenda after Treasurer Joe Hockey canvassed the idea of ditching ownership restrictions and even providing the national carrier with Government aid.
At a business function yesterday, Mr Hockey criticised the Qantas Sale Act, which says the airline must be at least 51 per cent Australian owned.
He said it was inflexible and he raised the possibility that Qantas might need public funds.
Qantas has been lobbying furiously for Government help in the face of increasing foreign support for its rival, Virgin Australia.
Chatham House rules were in place at the business function where Mr Hockey spoke, so neither he nor the meeting should have been identified.
Should the Government drop ownership restrictions on Qantas? Should public money be used to prop up the airline?
But someone wanted his views known, and soon the Australian Financial Review had obtained a transcript of his comments.
"So, in relation to Qantas, do you say, which you know will probably be my preference, do you say, 'OK, we are going to remove all the shareholding restrictions and let it fly', in which case we agree that we are not going to have a national carrier," the AFR quoted Mr Hockey as saying.
"Or do we say that we are going to have a national carrier, but we have got to do something about it.
"And if it gets into any sort of challenging environment, [we] have got to be prepared to put our hands in our pockets and support it."
At a separate event, The Australian newspaper raised Mr Hockey's comments with Qantas chief executive Alan Joyce.
"What we have seen in Canberra is the politicians listening to our arguments, the politicians saying there is an unlevel playing field here," Mr Joyce said.
It is understood Mr Hockey has called for a debate on whether Australia still wants a national carrier.
Qantas sell-off bad for jobs, Xenophon says
Independent Senator Nick Xenophon is a longstanding opponent of easing restrictions on Qantas's ownership and was happy to weigh in.
"My fear is that Qantas will either be vulnerable to a private equity takeover or foreign takeover," he said.
"Both scenarios are bad for Australian jobs, for Qantas's international and national reputation and my fear is that the Qantas we know today will just become a shadow of itself."
Qantas is furious Virgin Australia is receiving a $350 million injection from its foreign owners Etihad, Air New Zealand and Singapore Airlines.
It wants the Government to review whether its majority foreign owned rival should be able to access traffic rights reserved for Australian airlines.
Alan Joyce wants immediate action
Mr Joyce does not just want the focus on the Qantas Sale Act.
"The issues about the Qantas Sale Act is it's going to need an act of Parliament to repeal it and I think in the current Parliament getting it through the Lower House and the Upper House is an issue for us," he said.
"We need urgent, immediate action on this.
"This can't take months or years to go through an appeal process in Parliament."
The Australian and International Pilots Association supports easing restrictions on Qantas's ownership.
Association president Nathan Safe is expecting the Government to review the airline's situation.
"What we want to see is Qantas able to compete, able to access capital on the same terms as Virgin so that it has a long-term chance of being viable as a business and as an employer," he said.
"Whether it's done by someone like the Productivity Commission, or by the Senate, or by the Department of Transport, that remains to be seen, but when this review does take place we think it's vital that everyone has their chance to have their say."
At a business function yesterday, Mr Hockey criticised the Qantas Sale Act, which says the airline must be at least 51 per cent Australian owned.
He said it was inflexible and he raised the possibility that Qantas might need public funds.
Qantas has been lobbying furiously for Government help in the face of increasing foreign support for its rival, Virgin Australia.
Chatham House rules were in place at the business function where Mr Hockey spoke, so neither he nor the meeting should have been identified.
Should the Government drop ownership restrictions on Qantas? Should public money be used to prop up the airline?
But someone wanted his views known, and soon the Australian Financial Review had obtained a transcript of his comments.
"So, in relation to Qantas, do you say, which you know will probably be my preference, do you say, 'OK, we are going to remove all the shareholding restrictions and let it fly', in which case we agree that we are not going to have a national carrier," the AFR quoted Mr Hockey as saying.
"Or do we say that we are going to have a national carrier, but we have got to do something about it.
"And if it gets into any sort of challenging environment, [we] have got to be prepared to put our hands in our pockets and support it."
At a separate event, The Australian newspaper raised Mr Hockey's comments with Qantas chief executive Alan Joyce.
"What we have seen in Canberra is the politicians listening to our arguments, the politicians saying there is an unlevel playing field here," Mr Joyce said.
It is understood Mr Hockey has called for a debate on whether Australia still wants a national carrier.
Qantas sell-off bad for jobs, Xenophon says
Independent Senator Nick Xenophon is a longstanding opponent of easing restrictions on Qantas's ownership and was happy to weigh in.
"My fear is that Qantas will either be vulnerable to a private equity takeover or foreign takeover," he said.
"Both scenarios are bad for Australian jobs, for Qantas's international and national reputation and my fear is that the Qantas we know today will just become a shadow of itself."
Qantas is furious Virgin Australia is receiving a $350 million injection from its foreign owners Etihad, Air New Zealand and Singapore Airlines.
It wants the Government to review whether its majority foreign owned rival should be able to access traffic rights reserved for Australian airlines.
Alan Joyce wants immediate action
Mr Joyce does not just want the focus on the Qantas Sale Act.
"The issues about the Qantas Sale Act is it's going to need an act of Parliament to repeal it and I think in the current Parliament getting it through the Lower House and the Upper House is an issue for us," he said.
"We need urgent, immediate action on this.
"This can't take months or years to go through an appeal process in Parliament."
The Australian and International Pilots Association supports easing restrictions on Qantas's ownership.
Association president Nathan Safe is expecting the Government to review the airline's situation.
"What we want to see is Qantas able to compete, able to access capital on the same terms as Virgin so that it has a long-term chance of being viable as a business and as an employer," he said.
"Whether it's done by someone like the Productivity Commission, or by the Senate, or by the Department of Transport, that remains to be seen, but when this review does take place we think it's vital that everyone has their chance to have their say."
"So, in relation to Qantas, do you say, which you know will probably be my preference, do you say, 'OK, we are going to remove all the shareholding restrictions and let it fly', in which case we agree that we are not going to have a national carrier," the AFR quoted Mr Hockey as saying.
Interesting to know when Olivia briefed Joe on the latest developments.
Maybe during the lockout?
Either way this thing is a fait accompli.
The bigger issue of course is the general sick state of the qantas group as a whole, under the leadership(?) of Clifford and Joyce.
Even changing the sales act will not change the current state of play.
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Hockey issues Qantas warning
JOE Hockey has warned Australians they "may have to pay a price" if they want Qantas to stay an Australian majority-owned national carrier, as he ratchets up the debate about the airline's future.
The Treasurer, who conceded Qantas was facing “very significant” challenges, has called for a debate on whether foreigners should be allowed to own or control the airline.
“If Australians understandably say no, we think it should remain not only Australian-owned but Australian-controlled and we need to have a national carrier, and I think there are many good reasons for that as well, then we've got to accept we may have to pay a price for that and that's a burden the taxpayers may have to pick up,”
The Treasurer, who conceded Qantas was facing “very significant” challenges, has called for a debate on whether foreigners should be allowed to own or control the airline.
“If Australians understandably say no, we think it should remain not only Australian-owned but Australian-controlled and we need to have a national carrier, and I think there are many good reasons for that as well, then we've got to accept we may have to pay a price for that and that's a burden the taxpayers may have to pick up,”
Last edited by Gingerbread; 27th Nov 2013 at 23:40. Reason: More Content
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Yeah I agree. Joe is laying the groundwork here. Knowing that the public has (had?) a strong emotional attachment to Qantas he's anticipating the backlash from any proposed amendment to the QSA.
When that happens his response will be "it's either that or we will have to put a levy on fuel, cigarettes, alcohol, taxes etc to fund the $1bn required to keep it solvent, over to you, the taxpayer"
I'm guessing the public will fairly quickly lose their emotional attachment and the QSA will be amended early next year.
I'd say the deal has been done, they are just working on the politics and managing expectations now.
When that happens his response will be "it's either that or we will have to put a levy on fuel, cigarettes, alcohol, taxes etc to fund the $1bn required to keep it solvent, over to you, the taxpayer"
I'm guessing the public will fairly quickly lose their emotional attachment and the QSA will be amended early next year.
I'd say the deal has been done, they are just working on the politics and managing expectations now.
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Either the government should buy back into Qantas or cut it loose and let natural forces take place. I think we need a national carrier but not like this, it should be government owned. The whole show is so inefficient and full of irrelevant departments it needs a huge shake-up. On-ya Joe!
SN
SN
Why are we still discussing this?
Within six months the QSA will be revoked, and within two years you will all be working for Emirates (who will strip the airline bare like ANZ did to Ansett), and while you are all wondering what happened or dragging your family to Dubai to try and keep a job, AJ will be back in Ireland sitting atop his big pile of management bonuses for a job well done.
It's such a terrible shame that one of the few Australian icons left with an international reputation and presence will be gone SIMPLY due to inept management.
But not only has the fat lady sung, she's packed up her music, left the stage, and is enjoying her first wine backstage.
Within six months the QSA will be revoked, and within two years you will all be working for Emirates (who will strip the airline bare like ANZ did to Ansett), and while you are all wondering what happened or dragging your family to Dubai to try and keep a job, AJ will be back in Ireland sitting atop his big pile of management bonuses for a job well done.
It's such a terrible shame that one of the few Australian icons left with an international reputation and presence will be gone SIMPLY due to inept management.
But not only has the fat lady sung, she's packed up her music, left the stage, and is enjoying her first wine backstage.
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Slip
You know what if that's what happens then fine, the dead wood and hangar-onners will be cleansed from the organisation and we can all get on with our respective lives. Either that or the taxpayer should sign a blank cheque (one of those huge cardboard ones) and give to the QF board to line the coffers, but be prepared to keep signing more cheques!
SN
You know what if that's what happens then fine, the dead wood and hangar-onners will be cleansed from the organisation and we can all get on with our respective lives. Either that or the taxpayer should sign a blank cheque (one of those huge cardboard ones) and give to the QF board to line the coffers, but be prepared to keep signing more cheques!
SN