thanksreport from egoli websiteBritish Airways flies away from...

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report from egoli website

British Airways flies away from Qantas
8/09/04 By: Rikki Bannan

Qantas Airways Limited (QAN) requested a trading halt this morning as it confirmed that British Airways plc plans to sell its 18.25% stake in the air carrier over the next two days. Australia’s flag carrier advised the halt was expected to remain in place until Friday, and said this would allow the market to absorb the information in an orderly fashion.

British Airways, which has held an interest in Qantas for 11 years, has reportedly approached firms seeking bids for its stake. The Australian Financial Review today said that institutional demand for the holding was likely to be strong.


Qantas chief executive Mr Geoff Dixon noted that the company fully understood British Airways’ decision to sell its stake in the airline. He said the sale would have no effect on the commercial operation of Qantas.

“British Airways has been a supportive shareholder over a period of some ten years and both airlines have formed a strong and constructive commercial relationship,” Mr Dixon said.

“Neither airline now believes the shareholding is necessary for the ongoing conduct of that relationship,” he added.

“To this extent the joint services agreement that provides for joint schedules, sales and operations between Australia, South East Asia, the United Kingdom and Europe will continue, as will other forms of cooperation,” Mr Dixon advised.

Qantas commented that British Airways had said the sale would strengthen its balance sheet and place it in a robust position for any future European consolidation. Mr Dixon noted that Qantas had also stated publicly for some time that the airline industry was headed towards consolidation.

“The ‘tyranny of distance’ between Australia and the United Kingdom rules out such consolidation, but not cooperation, between Qantas and British Airways,” he said.

“We will, however, seek to further strengthen our commercial position to enable us to take a leading role in any suitable consolidation opportunities that may arise in the Asia Pacific region,” Mr Dixon added.

SHAW Stockbroking analyst Brent Mitchell also flagged the possibility of alliances.

“Qantas may be looking to form other alliances in the Asia Pacific region as it sees tremendous growth potential there. In particular, Singapore Airlines is a key player in the region,” he noted.

“The sale of this stake will also provide greater liquidity for Qantas and more opportunity for other overseas buyers to invest in the company,” Mr Mitchell commented.

Qantas has been subject to a 49% restriction on foreign ownership of its stock since it was first listed.

Qantas shares lasts traded at $3.33.