News: BA to sell 25% Qantas Stake speculation
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News: BA to sell 25% Qantas Stake speculation
SYDNEY (Dow Jones)--Shares in Australia's Qantas Airways Ltd. dropped 3.9% Wednesday amid heightened speculation its biggest shareholder, British Airways PLC ), is about to sell its 25% stake.
Speculation in London and Australia has spread like wild fire that BA may end its eight-year relationship with Australia's biggest airline because of financial pressure in the wake of the terrorist attacks in the U.S. last month.
A local broker with a major bank who asked not to be identified expects BA's 25% stake to "go on the block" later Wednesday or Thursday for between A$2.80 and A$2.90 a share, noting Credit Suisse First Boston is rumored to be facilitating the deal.
BA could raise around A$930 million from the sale of its 25% stake in Qantas.
A Sydney-based CSFB spokesman dismissed the speculation as nonsense.
"It's a rumor in the market but (has) no legs," he said.
Qantas shares dropped 13 cents, or 3.9%, to A$3.24 and was one of the most heavily traded stocks on the Australian Stock Exchange with 21.5 million shares changing hands.
Another Sydney-based broker at major investment bank said the resurfaced rumor was the prime driver behind Qantas' share slump but doubted BA would sell its stake in, adding property sales are more likely for the British carrier.
Qantas declined to comment on the BA speculation, which came just a day before its annual general meeting in Melbourne.
BA is under increasing pressure to cut costs after last months terrorist attacks in the U.S. crippled the international aviation industry.
Since Sept. 11, BA has cut 190 flights from its existing schedule, particularly between the U.K and the U.S.
BA lost GBP48 million in revenue over the week of the terrorist attacks, when its lucrative North Atlantic routes were suspended.
Some Raise Doubts BA Would Sell
International credit rating agency Standard & Poor's Tuesday lowered its corporate credit rating on BA to triple-'B'-minus, from triple-'B'-plus. Ratings remain on CreditWatch with negative implications, where they were placed Sept. 13.
A transport analyst at major investment bank also doubted BA would divest its Qantas stake even though the U.K. carrier could use a cash injection.
The analyst, who asked not to be named, noted a London colleague wasn't convinced BA is "strapped for cash," saying that "a bit of spare cash probably wouldn't go astray; obviously all the airlines are struggling but he doesn't seem to think they need to do it."
The analyst said BA avoided addressing the rumor with his London colleague. "They didn't confirm or deny," he said.
Peter Harbison, managing director of consultancy group Centre for Asia Pacific Aviation, told Dow Jones Newswires that BA would be foolish to sell its 25% cornerstone stake in Qantas, noting it is one of the few airline's doing well despite the crisis in the international aviation market.
"The best thing that British Airways has got at the moment is the 25% share in Qantas. They'd be better off selling British Airways than Qantas," said Harbison.
Harbison doesn't expect Qantas' commercial status to suffer if BA does sell its stake.
"In terms of its commercial viability, very little," he said.
Harbison said if sold it would be ideal for Qantas if BA's stake went to institutional investors rather than one big shareholder or a Qantas ally.
He said it would be "unlikely to very unlikely" that an American airline would buy the stake in the present international economic climate.
He wouldn't discount Singapore Airlines Ltd. (P.SAL) completely despite its strained relationship with Qantas over Air New Zealand Ltd. (A.AIZ).
"Stranger things have happened. They've been to that party before, and they're not really committed to anybody else at the moment," he said.
Sydney-based Qantas has benefited from the collapse of domestic rival Ansett and the crippling impact this has had on its parent company Air New Zealand.
In the past, BA has been keen to increase its 25% stake in Qantas, lobbying the Australian government to lift its 25% foreign ownership cap on airlines.
-By Lilly Vitorovich; Dow Jones Newswires;
61-2-8235-2963; [email protected]
Speculation in London and Australia has spread like wild fire that BA may end its eight-year relationship with Australia's biggest airline because of financial pressure in the wake of the terrorist attacks in the U.S. last month.
A local broker with a major bank who asked not to be identified expects BA's 25% stake to "go on the block" later Wednesday or Thursday for between A$2.80 and A$2.90 a share, noting Credit Suisse First Boston is rumored to be facilitating the deal.
BA could raise around A$930 million from the sale of its 25% stake in Qantas.
A Sydney-based CSFB spokesman dismissed the speculation as nonsense.
"It's a rumor in the market but (has) no legs," he said.
Qantas shares dropped 13 cents, or 3.9%, to A$3.24 and was one of the most heavily traded stocks on the Australian Stock Exchange with 21.5 million shares changing hands.
Another Sydney-based broker at major investment bank said the resurfaced rumor was the prime driver behind Qantas' share slump but doubted BA would sell its stake in, adding property sales are more likely for the British carrier.
Qantas declined to comment on the BA speculation, which came just a day before its annual general meeting in Melbourne.
BA is under increasing pressure to cut costs after last months terrorist attacks in the U.S. crippled the international aviation industry.
Since Sept. 11, BA has cut 190 flights from its existing schedule, particularly between the U.K and the U.S.
BA lost GBP48 million in revenue over the week of the terrorist attacks, when its lucrative North Atlantic routes were suspended.
Some Raise Doubts BA Would Sell
International credit rating agency Standard & Poor's Tuesday lowered its corporate credit rating on BA to triple-'B'-minus, from triple-'B'-plus. Ratings remain on CreditWatch with negative implications, where they were placed Sept. 13.
A transport analyst at major investment bank also doubted BA would divest its Qantas stake even though the U.K. carrier could use a cash injection.
The analyst, who asked not to be named, noted a London colleague wasn't convinced BA is "strapped for cash," saying that "a bit of spare cash probably wouldn't go astray; obviously all the airlines are struggling but he doesn't seem to think they need to do it."
The analyst said BA avoided addressing the rumor with his London colleague. "They didn't confirm or deny," he said.
Peter Harbison, managing director of consultancy group Centre for Asia Pacific Aviation, told Dow Jones Newswires that BA would be foolish to sell its 25% cornerstone stake in Qantas, noting it is one of the few airline's doing well despite the crisis in the international aviation market.
"The best thing that British Airways has got at the moment is the 25% share in Qantas. They'd be better off selling British Airways than Qantas," said Harbison.
Harbison doesn't expect Qantas' commercial status to suffer if BA does sell its stake.
"In terms of its commercial viability, very little," he said.
Harbison said if sold it would be ideal for Qantas if BA's stake went to institutional investors rather than one big shareholder or a Qantas ally.
He said it would be "unlikely to very unlikely" that an American airline would buy the stake in the present international economic climate.
He wouldn't discount Singapore Airlines Ltd. (P.SAL) completely despite its strained relationship with Qantas over Air New Zealand Ltd. (A.AIZ).
"Stranger things have happened. They've been to that party before, and they're not really committed to anybody else at the moment," he said.
Sydney-based Qantas has benefited from the collapse of domestic rival Ansett and the crippling impact this has had on its parent company Air New Zealand.
In the past, BA has been keen to increase its 25% stake in Qantas, lobbying the Australian government to lift its 25% foreign ownership cap on airlines.
-By Lilly Vitorovich; Dow Jones Newswires;
61-2-8235-2963; [email protected]
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IF it is true, I find it hard to understand, sure BA is suffering but you would think their investment in Qantas would currently be one of their few money making investments?
Surely for their sake they would be better keeping the Qantas investment and selling off other investments
[ 17 October 2001: Message edited by: lame ]
Surely for their sake they would be better keeping the Qantas investment and selling off other investments
[ 17 October 2001: Message edited by: lame ]
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Yeah well at the end of the day if you're backed up against the wall a cuppla mill in dividends is only interesting if you really need a billion to stay alive.
Whether they hold 25% or not won't change the relationship all that much.
QF don't need SQ either as a partner or shareholder.
My bet is that in the longer term SQ will be a mere shadow compared to QF.
Whether they hold 25% or not won't change the relationship all that much.
QF don't need SQ either as a partner or shareholder.
My bet is that in the longer term SQ will be a mere shadow compared to QF.
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Thursday October 18, 9:43 AM
Australia's QANTAS Denies Knowledge of Ba Plans to Sell Stake
MELBOURNE, Oct 18 Asia Pulse - British Airways, the largest shareholder in Qantas Airways Ltd (ASX:QAN) had said it wanted to keep its 25 per cent stake the company, the Australia's primary carrier said in a media briefing.
The briefing was held to announce plans by Qantas to purchase 17 new aircraft and raise $A300 million ($US152.34 million) in ordinary equity.
There had been speculation that BA planned to sell its 25 per cent holding.
British Airways does not plan to participate in Qantas' equity issue, according to presentation notes released by Qantas this morning.
A note in the presentation on BA's intentions reads: "Whilst our Qantas shareholding forms an important part of our asset base, British Airways is managing its business with a view to cashflow and, accordingly, does not intend to participate in the Qantas placement."
Qantas chief executive Geoff Dixon said he had had a long conversation with BA CEO Rod Eddington and other BA executives last night.
"Rod expressed a strong desire to keep the Qantas shares," Mr Dixon said.
But he added that it was a very volatile time for the industry.
Mr Dixon also restated Qantas' expectations to command between 65 per cent and 70 per cent of the Australian market when things returned to a more normal situation.
He also flagged talks with unions to see if they would agree to a wage freeze for staff.
Qantas shares remain in a trading halt.
ASIA PULSE
Australia's QANTAS Denies Knowledge of Ba Plans to Sell Stake
MELBOURNE, Oct 18 Asia Pulse - British Airways, the largest shareholder in Qantas Airways Ltd (ASX:QAN) had said it wanted to keep its 25 per cent stake the company, the Australia's primary carrier said in a media briefing.
The briefing was held to announce plans by Qantas to purchase 17 new aircraft and raise $A300 million ($US152.34 million) in ordinary equity.
There had been speculation that BA planned to sell its 25 per cent holding.
British Airways does not plan to participate in Qantas' equity issue, according to presentation notes released by Qantas this morning.
A note in the presentation on BA's intentions reads: "Whilst our Qantas shareholding forms an important part of our asset base, British Airways is managing its business with a view to cashflow and, accordingly, does not intend to participate in the Qantas placement."
Qantas chief executive Geoff Dixon said he had had a long conversation with BA CEO Rod Eddington and other BA executives last night.
"Rod expressed a strong desire to keep the Qantas shares," Mr Dixon said.
But he added that it was a very volatile time for the industry.
Mr Dixon also restated Qantas' expectations to command between 65 per cent and 70 per cent of the Australian market when things returned to a more normal situation.
He also flagged talks with unions to see if they would agree to a wage freeze for staff.
Qantas shares remain in a trading halt.
ASIA PULSE
