Rights Issue dead, page-4

Under extreme pressure...
QAN would be under extreme pressure if Singapore
Airline (SQ) decides this week to enter our domestic
market. It seems that the Board of Singapore Airline
would come up with a decision on their next meeting
on 11th September 2002.

There are a number of reasons SQ would prefer to
operate a third domestic airline in Australia. Firstly.
it would be able to carry the domestic passengers
joining SQ international flights to/from Australian capital
cities. Secondly, SYD-MEL and SYD-BNE are the most
profitable routes in domestic market. Thirdly, SQ cost
advantage and aircraft availability would benefit SQ to
utilise its capacity in full. Finally, its service quality standard, existing offices and sales team (currently selling SQ international flights in Australia) would be
capable to capture a substantial market share from
QAN.

I asked myself a few weeks ago why the new owner
of Sydney Airport offered to Qantas and Virgin Blue a
small number of ex-Ansett terminals. So... who would
take the rest? Would it be another new domestic
airlines? I bought 10,000 QANWCT at 15c and 5,000
more at 17c for my speculative portfolio... and sold
them a few days later when I saw QAN share price was
still very strong (this is one of my cold feet "stupid"
trade). I wish I still held those till now.

If QAN fails to raise a further $200 million, then it may
delay its plan to take 25% of AIZ. Such failure creates
further pressure on QAN in the new challenge against
a real threat from Singapore Airline.

My gut feeling tells me that SQ would be more rational
than Virgin Blue. SQ may compete in product standard
and service quality rather than in pricing. But even so...
it is still likely that QAN would suffer a potential loss of
market share to SQ.

While the international traffic is still sluggish, any
drop in the domestic market share would probably
affect QAN profitability in the short-run.

I bought a 20,000 QANWCT a few days ago... at an
average of 25.5c and this time I hope it works.

And... if I was in the position of Virgin Blue, I would
take up whatever available at the old Ansett terminal
before there would be nothing available for lease!!!



PLEASE NOTE: I am not a licensed broker. I am not
a finance adviser. The above information may be biased
and inaccurate due to my current position in QANWCT.

Please do your own research and seek for professional
advice.