June 26, 2007

Qantas shares fall as rivalry heats up

QANTAS shares fell sharply yesterday in what is seen as profit-taking and a sign the market is beginning to address future increases in capacity, including the arrival of new domestic entrant Tiger Airways.

The shares dropped as much as 10c before recovering in afternoon trading to close 4c down at $5.61. Qantas shares have now fallen 22c from the $5.83 high achieved in the wake of the failed private equity takeover.

The fall came after chief financial officer Peter Gregg revealed he had sold 200,000 shares, worth $1.15 million.

From the news release of this article's source the sale, at almost $5.77 per share, was about 17c per share above the original Qantas bid price of $5.60 ($5.45 after the payment of a 15c dividend) and comprised about 18 per cent of the shares directly and indirectly held by Mr Gregg.

Deutsche Bank analyst Jason Bloom said he doubted the sale had triggered the share price drop. "I think it's probably just a bit of profit-taking - Qantas has been quite strong lately," Mr Bloom said.

"The other thing you're seeing is Tiger Airways announcing aircraft purchases and there has been a bit of banter between Jetstar and Tiger about intention.

"Tiger seems to be pointing out they're definitely coming to Australia, so there's a bit of realisation there will be some fairly large capacity increases."

Singaporean-backed Tiger plans to start domestic operations later this year with five aircraft but has said it is prepared to expand its fleet.

The Kiwi carrier announced yesterday it would spend $NZ50 million ($45.25 million) to equip its 13 Airbus A320 and five Boeing 767 aircraft with individual on-demand personal entertainment screens.

By Steve Creedy, Aviation writer
The Australian

No comments: