Psst … Qantas is tipping $1b plus

QANTAS has posted its fourth profit upgrade this financial year, reinforcing the view the failed $5.45 a share Airline Partners Australia takeover bid had seriously undervalued the airline.

The carrier, however, did not appear too keen to spruik its latest upgrade, which came just three days before the end of the fiscal year and two months since the collapse of the $11.1 billion Macquarie-led takeover bid.

At the bottom of a statement which confirmed Qantas had sold its remaining 4.2 per cent stake in Air New Zealand, the airline said it "remained comfortable with its previous guidance that its 2006-07 profit before tax was in line with the average of market expectations".

Given Qantas's strong load and traffic figures have led analysts to lift their forecasts in the three months since the previous upgrade, the comment translates into a 13 per cent profit upgrade.

In March Qantas forecast a $940 million pre-tax annual profit. Yesterday the median of analyst forecasts calculated by Bloomberg predicted a record $1.06 billion pre-tax profit.

The Qantas board is also expected to consider a "capital management scheme" at its next meeting, on July 18. It could decide to make a special dividend payment to shareholders or instigate a share buyback.

Analysts estimate the airline's relatively low levels of debt could allow it to pay back $2 billion to its shareholders.

Despite yesterday's untrumpeted upgrade, Qantas shares fell 9c to $5.52 amid concerns the Singapore-based Tiger Airways could spark a domestic airfare war this summer.

The Singapore Airlines part-owned budget airline yesterday announced it would launch its first domestic flight, between Melbourne and Darwin, on December 1, offering $80 one-way fares.

Tiger is also looking to challenge the Qantas-owned Jetstar's share of the low-cost market into Asia by offering "combo" fares to its Singapore base, via Darwin. It is offering $499 return fares between Melbourne and Singapore.

Read the news release of this article's source at Sydney Morning Herald by Scott Rochfort Read More..

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 Read More..

The CFO of Qantas obtains $1m of the part for sale

ALMOST two months after the partnership of Australia of the partners of the air line failed in its supply of possession taking $11,1 billion for Qantas, the main financial official of the air line has taken advantage of the high price elevated of the action to sell a worthy package of parts of $1,15 million.

The shareholders of Qantas watched generally the supply of $5.45-a-share like too low, and the acceptances lacked the required level.

That vision appears to be justified. Qantas shares 5¢ submerged to $5,65 yesterday, but 20¢ was immovable on the price of supply of APA. In a declaration to action stock-market, Qantas CFO Peter who Gregg revealed it had sold 200,000 parts in $5.77.

In August last year 166,000 shares he had been granted under Qantas' long-term incentive plan were released from restriction. He still has a direct interest in 285,000 shares and an indirect interest in 620,500.

The chief of a main directorate of the group of Qantas of the sales and the distribution, Gurney robbery, said that the commercial relation every greater time of Australia with India had created increasing demand. He said that the agreement would complement the existing services, that worked three times to the week between Sydney and Mumbai.

Read the news on the source at: The Age Read More..

Air market shake-up in Australia

Australia's aviation market is facing major changes in the wake of a failed US$9.3b takeover bid for Qantas.

High visitor numbers, a strong economy and high load factors are causing Qantas competitors, Virgin Blue and Jetstar to expand.

Tiger Airways from Singapore has also been given an entrée into the market.
The last major shake-up in the Australian market occurred when British billionaire Richard Branson launched his discount carrier Virgin Blue in August 2000, challenging Qantas' stranglehold on the Australian domestic market.

Qantas responded with its own cut-price offering, Jetstar, in 2004.

But the arrival of Tiger Airways has the potential to upset the market balance, with both Virgin Blue and Qantas' Jetstar preparing to improve their services.

Tiger Airways chief Tony Davis believes the no-frills formula which has worked so well in Asia can also succeed in Australia.

Read more from the source at: Calcutta News Read More..

A380 takes to our skies

IT has an 80m wingspan and can carry more than 500 people.

But the world's largest passenger airliner launches into the sky with cabin noise you could expect from a cruising car. The large but quiet future of long-haul air travel was revealed yesterday when Qantas and Airbus took the first Australian passenger flight of the A380 into Sydney's skies.

Frequent flyers, Qantas staff, media and VIPs including Qantas board member General Peter Cosgrove, TV host Kerri-Anne Kennerley and pioneering female pilot Nancy Bird Walton toured the double decker behemoth as it swept low over Sydney Harbour, the Opera House and Canberra on a two-hour trip, part of an Airbus promotional tour.

Passengers were impressed with the super jumbo's quiet take-off, extra leg room and overhead clearance.

"I think the noise level on take-off is dramatically lower than you would normally experience on a 747," said Roger Thiedeman of the UK-published Airways magazine.

"Admittedly we didn't have a full load of passengers or baggage but it's good. I think the seat pitch is good, I am just a shade under 6ft and I can picture myself here on a long flight. I don't think it would be terribly uncomfortable."

The touring A380 has an Airbus cabin design, which includes first and economy seats on the bottom deck and economy and business class seats on the top, along with a small lounge. Furnishings are mostly pale. There are stairs at the front and back of the aircraft.

Big bird: The world's largest passenger aircraft, the Airbus A380,
takes off on a demonstration flight from Sydney airport yesterday.
Picture: AFP

Qantas has ordered 20 of the aircraft that were originally due to start being delivered last year. The first is now due in August next year and will fly from Melbourne to LA.

Details of the cabin design for Qantas have not yet been released.

The cabin can be designed with about 550 seats, but executive general manager John Borghetti said planes would have between 450 and 500 seats to allow for the cabin design the airline wants.

Read the rest of this article's at: www.news.com.au Read More..

Air wars: taking tiger by tail

QANTAS offshoot Jetstar yesterday fired its first shot for control of the budget travel market by offering a new bonus system to undercut Virgin Blue and soon-to-launch Tiger Airways.

The strategy is based on rewarding loyal Jetstar passengers with vouchers which they can use to offset the cost of future travel.

Under the new arrangement, customers can claim double the difference between the cost of competing fares if they are offered an online fare lower than Jetstar's fare.

Both flights must be on the same day and take off within an hour of the other.

The new reward plan is among a raft of major changes aimed at improving Jetstar's 15 per cent share of domestic travel.

The new strategy, which was outlined to the market last week by Qantas chief executive Geoff Dixon, also involves plans to add a frequent flyer program to Jetstar services next year.

Jetstar's recently introduced long-haul operations to Bali, Thailand and Hawaii are also to be upgraded with extra new-generation Boeing aircraft.

The airline will now get 15 next-generation Boeing 787 Dreamliners, up from the original order of 12 planes.

They will replace Jetstar's existing fleet of former Qantas A300 jets.

The first of the new 300-seat Boeings is due to enter service in October next year.

Addressing a tourism conference in Brisbane yesterday with Qantas executives, Jetstar chief executive Alan Joyce said the double-the-difference program would enshrine Jetstar's commitment to "low fare leadership".

Mr Joyce said Jetstar had offered the lowest domestic fares for three years and was acknowledging this now with Jetstar travel vouchers.

Qantas also outlined plans to upgrade its international and domestic operations.

This August, when Tiger Airways begins services, Qantas will add more than 500 seats a week to flights operating on the Brisbane-Perth route.

Rob Gurney, Qantas group general manager sales and distribution, told the same conference that three extra Boeing 737-800 jets would be placed on the Brisbane-Perth roster.

The new arrangement would give travellers two early morning departures, an early afternoon service and an early evening flight.

Visitors would have the opportunity to fly out of Perth at 5.20pm after day trips to Rottnest Island or Margaret River, Mr Gurney said.

Qantas's long-haul division also has plans to upgrade and add new services, with extra flights to Shanghai, Los Angeles and South Africa.

The flying kangaroo will also make a return to South America, with direct services between Sydney and the Chilean capital, Santiago, due to start in November.

Qantas abandoned what was then a loss-making service to South America several years ago.

Mr Gurney said supplementary services would operate to Beijing to coincide with the 2008 Olympics.

Under its new schedule, Qantas will add an extra service between Sydney and Shanghai from August, which will make five flights a week.

Two extra services from Brisbane to Los Angeles and one from Sydney to Los Angeles will operate from next March, making 43 flights a week to the US mainland.

And an extra weekly service will operate between Sydney and Johannesburg from November next year.

By Geoff Easdown
Source: Herald Sun Read More..

Qantas in probe on cartel pricing

QANTAS is co-operating with US and British regulators investigating price-fixing of fuel surcharges.

In a breakthrough for Britain's Office of Fair Trading and the US Department of Justice, British Airways admitted to cartel involvement and set aside pound stg. 350 million ($847 million) in provisions two weeks ago to cover potential compensation for freight customers who might have been overcharged.

A Qantas official told The Australian last night that it was co-operating with the investigations. Qantas has not admitted to price-fixing.

Besides BA and Qantas, Singapore Airlines, Cathay Pacific, Air New Zealand, Lufthansa and Japan Air Lines are being investigated for colluding on freight fuel surcharges, post-September 11 security surcharges and "war risk" surcharges relating to insurance costs associated with the war in Iraq.

Plaintiff law firm Maurice Blackburn Cashman served a $200 million cartel class action on Qantas and the other carriers in January and is believed to have signed "hundreds" of freight clients to the lawsuit.

Fuel surcharges comprise some 10 per cent of freight costs in the $50 billion global market.

MBC principal Kim Parker said yesterday that freight surcharges had been inflated over the past seven years and compensation was due.

"British Airways are now saying that they did it. They also say they will put aside funds to make good the losses and to pay any fines," she said.

"The businesses affected by this price-fixing cartel should take a great deal of confidence from an open admission of this kind and it certainly shows that the recovery of their losses from the responsible airlines is completely justified."

Lufthansa settled with a class action of air freight clients in the US last year for $US85 million ($103.7 million) after some 80 civil claims were consolidated. The German carrier also settled in Canada.

BA said the US Department of Justice, the OFT and the European Commission were investigating anti-competitive activity on "long-haul passenger and cargo fuel surcharges" and conceded it had "become apparent that there have been breaches of (competition compliance) policy in relation to discussions about these surcharges with competitors".

The company had made provisions to settle claims and for "potential government fines in a number of countries" and for civil claims in the US, Australia and Canada.

The Australian Competition & Consumer Commission is believed to have been involved in the investigation.

By Michael West
Source: theaustralian.news.com.au Read More..

Qantas is better than a bought one

QANTAS has provided plenty of reasons for its shareholders to rejoice over the collapse of the $11.1 billion Airline Partners Australia takeover bid.

Shares in the carrier outstripped the $5.45-a-share APA offer yesterday, after Qantas chief executive Geoff Dixon provided the most upbeat commentary of his seven years heading the airline.

Aside from talking up the prospect of Qantas undertaking its first capital return since its 1995 listing, Mr Dixon indicated the airline was considering a possible spin-off of its frequent flyer program that analysts believe is worth up to $1.5 billion.

The analysts briefing Mr Dixon delivered yesterday morning contained very little of the doom and gloom to which investors have become accustomed.

"It really is very favourable for the aviation industry in general," said Mr Dixon, who said he expected Qantas's current dream run could continue until early 2009. Qantas hit a record $5.54 before closing 1c up at $5.46.

"Overall we are getting a net benefit from the Australian dollar and our forward bookings are very positive indeed," he said.

"Qantas international has probably had its best year and we expect that to continue next year for some time," he said. While Mr Dixon cited oil prices and plans by Singapore Air-backed Tiger Airways to grow its Australian domestic fleet to 30 jets as a serious threat, for the first time he appeared more focused on the positive sides of the airline business. Despite his recent warnings on the threat posed by Middle Eastern carriers such as Emirates and Etihad, Mr Dixon even conceded Qantas had a "strong structural" position on the UK, Japan, Hong Kong, South African and highly protected US routes.

The Qantas chief suggested his airline would have a cost benefit over its main rivals once it took delivery of the fuel efficient Boeing 787s in August next year.

However, Mr Dixon rejected speculation Qantas was looking to spin off Jetstar. He said it would remain "100 per cent" Qantas owned. But he declined to elaborate on the "demerger" mentioned in presentation notes.

But the airline hinted it could partially sell its 4.9 million member frequent flyer program within the next year. It is believed the "review" of the scheme could result in Qantas following Air Canada's lead and partial sale in the scheme. Air Canada's 5 million Aeroplan scheme is worth $4.8 billion on the Toronto Stock Exchange.

Mr Dixon said Qantas was exploring its biggest expansion of its international routes and said it was considering boosting its order for 787s by 20 to 85.

After scaling back its services to mainland Europe over the past decade, the airline hinted at the possible reintroduction of Paris flights and expansion of Frankfurt flights. "We do feel we need to have a greater presence back into Europe," Mr Dixon said. Mr Dixon even flagged the possibility of Jetstar flying into Europe and the Middle East by late next year. It is believed Beirut, Athens, Rome, Milan and Manchester are being evaluated as potential Jetstar ports.

Qantas also said it planned to expand aggressively into the express freight business in Asia. And following its purchase of a 30 per cent stake in Vietnam's Pacific Airlines, Mr Dixon said Jetstar was exploring the Indonesian, Philippine and Thai domestic markets.

Despite being a strong supporter of the APA bid, Qantas chief finance officer Peter Gregg appeared equally upbeat. He said Qantas would retain its status as one of only three airlines in the world to have an investment grade credit rating.

By Scott Rochfort

Source: The Sydney Morning Herald Read More..

Qantas Airways May Spin Off Units, Return Cash

Qantas Airways Ltd. Chief Executive Officer Geoff Dixon said the airline may spin off some units or return cash to investors after the failure of a A$11.1 billion ($9.1 billion) buyout he supported.

Australia's largest airline is benefiting from "favorable" conditions such as rising ticket sales and strong global economic growth, Dixon told analysts today in his first public comments since the Macquarie Bank Ltd.-led buyout collapsed May 8.

"We think we can handle most of what's coming at us," said the 67-year-old, who last week pledged to stay at the airline for at least two more years.

He is meeting with employees, investors and analysts this week to ease strains after shareholders ignored a board endorsement and rejected the A$5.45-a-share cash buyout as too low.

"The overall tone was positive for Qantas," said Matt Crowe, a transport analyst at JPMorgan Chase & Co. in Sydney. "They highlighted freight and the loyalty program as areas where they think they can do something to enhance value."

Qantas shares rose 4 cents to A$5.46 at the close of trade in Sydney. They earlier reached a record A$5.54 in Sydney, climbing above the offer price for the first time. More than 112 million shares traded, making it the most active stock on the Australian exchange today.

Chairman Margaret Jackson had urged investors to accept the offer, saying shareholders who thought the stock wouldn't fall if the buyout failed had a "mental problem." Jackson last week said she will quit the board.

Frequent Flyers

Qantas will consider returning capital to shareholders via a special dividend, a share buy-back or splitting up the company, Dixon said without elaborating.

The airline will review the ownership of its loyalty program, which has 4.9 million members, Dixon said. The unit makes money by selling air miles to banks, credit card companies and retailers to use to reward customers.

Qantas plans to create an Asia-Pacific freight company, and is finalizing a small acquisition in Asia, according to a slide presentation lodged with the stock exchange. The airline is also interested in further acquisitions throughout Asia, particularly as it seeks to expand its low-cost carrier Jetstar in markets such as Indonesia, Thailand and the Philippines, Dixon said.

Analysts at UBS AG and Goldman Sachs JBWere Pty this week upgraded their ratings on Qantas shares to "buy" from "hold," citing factors such as increased demand for international travel.

Profit Forecasts

Global airline passenger traffic, measured as the number of passengers multiplied by the distance flown, will rise 5 percent this year, and cargo traffic will increase about 4.9 percent, the Geneva- and Montreal-based International Air Transport Association said April 4.

The "favorable" conditions will probably last for at least 12 to 18 months, Dixon said.

Australia's economy is in its 16th straight year of growth and the jobless rate has fallen to a 31-year low, giving more people more to spend on holidays and travel.

Qantas increased its earnings forecast twice after the board endorsed the buyout, saying pretax profit may almost double to A$1.23 billion in fiscal 2008, from A$671 million in the 12 months ended June 30, 2006.

The carrier didn't see the need to upgrade its forecast for the current fiscal year, Dixon said today.

The buyout group, which also included Texas-based TPG Inc. and Sydney-based Allco Finance Group, planned to increase Qantas's debt to return A$4 billion to shareholders within a year of taking control.

Credit Rating

The airline may return A$2.2 billion to shareholders through a special dividend or share buyback, analysts at Merrill Lynch & Co. said in a report last week.

Standard & Poor's affirmed Qantas's BBB+ credit rating after the buyout failed, though said a return of capital to investors may lead to a downgrade.

Qantas had A$3.18 billion cash at Dec. 31 and total debt of almost A$7.5 billion, according to S&P.

The entry of discount carrier Tiger Airways Pte to Australia, higher oil prices and an increase in the number of aircraft globally, posed a risk to Qantas's earnings outlook, Dixon said. Tiger is 49 percent owned by Singapore Airlines Ltd.

Qantas has 67 percent of the Australian air travel market, it said today. Jetstar, which was started to compete with Virgin Blue Holdings Ltd., has a 15 percent market share.

James Packer, Australia's richest man and executive chairman of Publishing & Broadcasting Ltd., said last week he would also step down from the Qantas board. He didn't provide a reason for the decision.

The airline will conduct an "orderly" search for new directors, with replacements likely to be named before the annual shareholder meeting later in the year, Dixon said.

To contact the reporter on this story: Joyce Moullakis in Sydney at Jmoullakis2@bloomberg.net

Source: Bloomberg Read More..

Tiger talks $19 Melbourne fare

Plane tickets to Melbourne will cost as little as $19 each way if Canberra Airport is successful in its bid to host the Singapore-based Tiger Airways.

The low-cost airline is planning an aggressive pricing strategy to lure passengers away from Virgin Blue and Qantas if it comes to Canberra.

Managing director of Canberra Airport Stephen Byron met with Tiger executives a fortnight ago to make a final pitch for the company's business.

Tiger announced yesterday it would base its operations at Melbourne Airport but is not expected to decide on flight routes for a few months.

Mr Byron said the airline was considering one flight each way per day, six days a week, from Canberra to Melbourne.

"It's very much a commercially attractive proposition for them because the leisure market around Canberra is under served and there is certainly a shortage of seats for $19," he said.

"They are talking about very low prices because they're very committed to making it work."

Tiger expects to have its air operators certificate by the end of the year, with flights to start soon afterwards.

Virgin Blue is also set to announce additional flights within Australia in anticipation of the delivery in September of the first its fleet of 20 new and smaller aircraft.

Virgin will decide on the locations of its extra flight routes within months but announced yesterday a new VIP lounge to be built at Canberra Airport.

Mr Byron was hopeful Virgin would add to its 58 flights per week in and out of Canberra.

He said airport operations would continue to grow, with plans for a new $100 million terminal in the final stages of negotiations with the airlines.

The airport, Qantas and Virgin have been going through a lengthy process of sorting out lease agreements and legal contracts for the new terminal.

The next step is to design the terminal, which should take about six months.

Mr Byron said the potential takeover of Qantas would not effect plans for the new terminal, but there was still no guarantee the project would go ahead.

"Barring a catastrophe which is not unknown in aviation in relation to surging oil prices, SARS, terrorism and security we are committed to building a new terminal at some point but we can't do that without the agreement of our airline partners."

The airport will start work next month on 330 short and long-stay car-parking spaces to meet current and future demand.

Tiger Airways president and chief executive Tony Davis said yesterday the airline expected to operate at a loss for the first years of operation. "There is no airline that I'm aware of that starts from scratch as a greenfields operation that makes money in its first year.

"What we've managed to do is invest very heavily in new equipment, we're flying brand new aircraft that are very expensive. That's a lot of investment up front for a long-term return.

"We are certainly not in the not-for-profit business, we are in the profit-making business and we believe we can do that by offering really good low fares on a sustained basis."

Marika Dobbin and Micjael Ruffles
Source: The Canberra Times, ACT

Via: eden.yourguide.com.au Read More..

Qantas Airways Chairwoman Margaret Jackson To Step Down; Board Member James Packer To Resign

(RTTNews) - Early Friday, Australia's Qantas Airways Ltd. (QUBSF.PK) announced the decision of its chairwoman Margaret Jackson to retire from the company's Board later this year. Board member James Packer would also resign, with effect from the company's Annual General Meeting in late 2007.

Jackson, who served for seven years as Chairwoman, said that she had informed her fellow Board members of her decision at the beginning of a two-day strategy session of the company's board and management yesterday. Jackson will not stand for the re-election to the Board.

According to Jackson, the strategy meeting discussed the company's plans for the next three years, following the failure of a takeover bid by a private equity group Airline Partners Australia or APA.

In early May, Australia's Takeovers Panel rejected APA's A$11.1 billion or US$9 billion cash offer for the nation's biggest airline. According to the Panel, APA failed to win the required 50% acceptance level from the company's shareholders before the expiry of the offer deadline.

The APA consortium, which includes Australian companies Macquarie Bank Ltd (MQBKY.PK, MQBWF.PK), Allco Finance Group Ltd and Allco Equity Partners, US buyout firm Texas Pacific Group and Canada's Onex Corp, said then that it was seeking an urgent review of the Panel's decision.

If APA had won 50% of shareholder acceptances, it would have triggered a two-week extension of the A$5.45 share offer to allow the consortium to reach the minimum 70% it needed to succeed.

Sources said that Jackson, along with Qantas' Chief Executive Officer Geoff Dixon and other directors, was under pressure to quit the company's board as she supported the bid by APA. However, Dixon has committed to stay as the company's Chief Executive Officer until at least July 2009. The Board has endorsed the leadership of Dixon and the senior management team has agreed to continue with the company, Jackson stated.

Jackson, who served on the company's Board for 15 years, also said that the company would conduct an extensive review of its capital management strategies over the next few months. "The Board will spend the next few months considering my succession and a replacement for James, who has served the Board with distinction and diligence," she said.

The aviation market has endorsed Qantas' strategies, which led to the bid by APA, the largest takeover offer for an airline in the history of the industry, Jackson added.

During the two-day strategy session, the company's Board reinforced its support for the continuation of its strategic direction, including the growth of domestic flying businesses, restructuring of the company's international airline operations and supply businesses, investment in new generation aircraft and product, consideration of consolidation opportunities and cost reduction efforts.

QUBSF.PK closed Thursday's trade at US$4.40, up US$0.10 or 2.33% on a volume of 250 shares.

Source: www.nasdaq.com Read More..

With ASIC in the mix, the Qantas players might dance to a new tune

THE $11 billion question now is not whether the Airline Partners Australia consortium may make a new offer for Qantas Airways but whether it must do so.

Specifically, has APA's twice asserted statement that it is considering making a new offer for Qantas triggered an obligation under section 631 of the Corporations Act to make such a bid within the next two months?

ASIC's long-standing practice note on "announcing and withdrawing" takeover bids would suggest that the regulator considers the answer to that question is a resounding "yes" - it's difficult to construe the regulator's stated views in any other way.

Section 631 says it's an offence if a party publicly proposes to make a takeover and does not make the offer within two of making that announcement. It's a criminal offence, which for an individual can attract a fine of up to $11,000 or up to two years gaol, or both. For a company the maximum fine is $550,000.

Section 631 is designed to prevent manipulation of the market by parties acquiring shares in a target, then announcing a fake bid which pushes up the price and enables them to sell at a profit.

ASIC's view is that section 631 forbids a bidder from announcing an offer "unless it has taken adequate measures to ensure that sufficient funds will be available and that the bid can otherwise be made in accordance with the public announcement". ASIC says it will consider prosecuting any bidder which should have known it might not have been able to provide the consideration.

It also warns that it may take enforcement action if it appears that the law has been breached in relation to an announced bid.

APA has twice stated it is considering a new offer - and both times at strategically important times - before Qantas was about to come off a trading halt.

On Monday morning, after the Takeovers Panel and ASIC had both refused requests to extend the initial offer for a further two weeks, APA said that because a majority of Qantas holders (both by number an value) had lodged acceptances, the consortium was exploring a number of alternative "including the possibility of making a renewed offer at $5.45 a share". That of course is the same price as the failed bid.

That statement was made just before 10 am and at that time trading was to resume in Qantas shares at 11 am. But around the same time the panel revealed that APA had suggested that it may in fact have obtained acceptances for more than 50 per cent by last Friday's 7pm bid deadline and the offer may therefore have been automatically extended for a further two weeks. The basis for that argument is that the Qantas bid was for all of each target shareholding - that is, holders couldn't accept for part of their stake; if they did they were legally deemed to have irrevocably accepted for all of their shares. APA considered that some hedge funds had accepted for only some of their holdings and if their entire holdings were included the consortium would have at least 60 per cent of Qantas.

(Three hedge funds, Heyman Fund, Polygon Capital and Highbridge held 20 per cent of Qantas and indicated they intended to accept for sufficient shares to get APA over 50 per cent, but Heyman didn't do so)

ASIC stepped in and required a trading halt pending clarification of the issue raised by APA. Qantas reluctantly did so and requested a halt until the commencement of trading yesterday.

However, at around 9am yesterday APA called off the bid, despite having spoken to certain shareholders who acknowledged their acceptances should extend to their entire holdings and if that applied at Friday's bid close APA would have had more than 50 per cent of the capital. But APA admitted the legal interpretation wasn't clear and that, given the time it could take to litigate the issue and the uncertainty for Qantas and its shareholders, the consortium would not purse the argument and the offer should "treated as having lapsed".

To put the matter beyond doubt ASIC modified the law to ensure the offer had closed as of last Friday. The modification said "for the avoidance of doubt the bidder's voting power in the target is taken not to have increased to more than 50 per cent in the last 7 days of the offer period for the takeover bid".

APA repeated that because a majority of Qantas shareholders supported the bid it was still exploring a number of alternatives, including the possibility of a new bid, but this time made no mention of an offer price.

However, its earlier reference to a renewed offer price of $5.45 would lend weight to the view that APA has made statements that ASIC would consider had triggered a section 631 requirement to proceed with an offer.

After APA ran up the white flag, trading was resumed in Qantas shares. Almost 165 million shares - or 8 per cent of the capital - were traded, with the share price closing down 16c, or 3 per cent, at $5.22, after sales down to $5.13.

That's not a rout, and is much less than many had predicted. But it's also undoubtedly the case that the current share is also underpinned by speculation that APA will return with a new bid - understandably, as APA itself has flagged that possibility.

If APA is considering a new offer then according to ASIC's practice note it shouldn't have said anything until it had taken reasonable steps to ascertain that its financiers would again make the funds available. Of course, it's by no means certain that the Qantas board would now recommend a renewed offer of $5.45 a share. It looked a very generous price at the time, but since the market has risen sharply and Qantas has announced three profit upgrades. Moreover, it's that much closer to a federal election and it must be wondered whether this time around the Federal Treasurer, Peter Costello wouldn't about-face and refuse foreign investment approval.

Intuitively, it would seem to have been in APA's interest to have said nothing about considering a new bid at this stage. The likely result would have been a steeper fall in the Qantas share price, and that may have made shareholders more amenable to a renewed offer price.

But it could also have led to hedge funds selling out, rather than wait to see if there were further developments. And the likely buyers would be local institutions which might be less inclined to accept a new bid.

If APA does bid again, the members of the consortium may be concerned at the risk of further reputational damage if they were associated with an offer that failed a second time, and that would be a real risk at $5.45 a share.

Any new offer may have to be sufficiently above $5.45 to ensure that it would succeed - but of course, that's what APA, and the Qantas board, had been offered in the first instance.

ASIC may have misgivings that an offer above $5.45 would breach APA's earlier commitment that it was the consortium's final price. But that commitment was to a bid which is now closed and it must be wondered whether ASIC would be prepared to take action to prevent Qantas shareholders form receiving a higher offer.

It won't surprise if, after APA weighs everything up, APA decides it's all too hard and that it won't bid again. If that happens it would put the acid on ASIC to decide whether it would seek to require a new bid.

By Bryan Frith. Contact: bfrith@acenet.com.au
Source: theaustralian.news.com.au Read More..

Qantas board under scrutiny

THE QANTAS Airways board and senior management will come under scrutiny for their role in the collapsed bid for the Australian national carrier, ABN AmroCraigs client adviser Peter McIntyre said yesterday.

The buyout group bidding for Q a n t a s , w h i c h i n c l u d e s Macquarie Bank and private equity firm Texas Pacific Group, is said to be exploring alternatives, including a fresh $A5.45 a share offer after the collapse of its previous $A11 billion ($NZ12.4 billion) bid at the weekend.

Mr McIntyre said in an inter view that the board, particu larly chairwoman Margaret Jackson, would face some hard questions from shareholders over the role the directors played in supporting the col lapsed bid.

Qantas chief executive Geoff Dixon could escape censure because shareholders viewed him as a source of stability as the airline regrouped.

‘‘If Geoff Dixon leaves, this will just create further insta bility for the company,’’ Mr Mcntyre said.

The buyout group, Alliance Partners Australia (APA), said in a statement a majority of Qantas shareholders had now lodged acceptances for the offer.

‘‘APA is exploring a number of alternatives, including the p o s s i b i l i t y o f m a k i n g a renewed offer for Qantas at $A5.45 per share,’’ APA said.

The previous offer was also $A5.45 a share.

The world’s largest airline takeover bid failed after APA failed to reach the 50% level of acceptances needed to extend the bid by a deadline on Friday.

Australia’s Takeover Panel rejected an application by APA over the weekend to include late support from a major s h a r e h o l d e r who missed a deadline for acceptances.

A P A s a i d t h e l a t e a c c e p t a n c e brought it up t o 5 0 . 6 % . Reaching 50%, g a v e A P A another two weeks to gain t h e 7 0 % threshold for a successful takeover.

The Australian Securities and Investments Commission said yesterday it had also refused an application by APA over the same matter.

Mr McIntyre said analysts’ r e p o r t s f r o m A u s t r a l i a suggested that top politicians and union leaders were happy the deal had collapsed. The Australian budget was due out today and the takeover deal would have taken some of the media attention away from treasurer Peter Costello.

The collapse of the deal also showed that APA, and other privateequity funds, might have to lift their bids for take over targets.

‘‘I have been talking to a lot of investors today who are happy with the company and who want to be there for five or 10 years. They are saying that if they give up their shares, where will they place the funds? We know that private equity balance sheets have around 70% cash so there is a lot of cash washing around. Those funds might have to think about paying more if they want to succeed.’’

Shareholders would have noted the improved profit guid ance from Qantas and that analysts were picking an improved dividend. The $A5.45 offer was only a ‘‘modest premium’’ on the share price.

Qantas shares were placed in a trading halt early yester day.

Mr Costello said the future of Qantas was a matter for the current board, but repeatedly called on it to make a public statement regarding its plans.

‘‘A bid was put forward to buy Qantas shares which conformed with our require ment that there be majority Australian ownership.

‘‘When the time for the bid expired, the majority of share holders had not accepted it. The shareholders didn’t accept it. The bid fails. The bid is over.

‘ ‘ Q a n t a s i s n o w b e i n g managed by the same board, the same chief executives.

‘‘What they intend to do with Qantas is a matter for them and they should make a statement.

‘‘They have to now tell you what they intend to do with Qantas.’’

By Dene Mackenzie
Via: www.odt.co.nz Read More..

Qantas board under scrutiny

THE QANTAS Airways board and senior management will come under scrutiny for their role in the collapsed bid for the Australian national carrier, ABN AmroCraigs client adviser Peter McIntyre said yesterday.

The buyout group bidding for Qantas, which includes Macquarie Bank and private equity firm Texas Pacific Group, is said to be exploring alternatives, including a fresh $A5.45 a share offer after the collapse of its previous $A11 billion ($NZ12.4 billion) bid at the weekend.

Mr McIntyre said in an inter view that the board, particularly chairwoman Margaret Jackson, would face some hard questions from shareholders over the role the directors played in supporting the col lapsed bid.

Qantas chief executive Geoff Dixon could escape censure because shareholders viewed him as a source of stability as the airline regrouped.

"If Geoff Dixon leaves, this will just create further instability for the company," Mr Mcntyre said.

The buyout group, Alliance Partners Australia (APA), said in a statement a majority of Qantas shareholders had now lodged acceptances for the offer.

"APA is exploring a number of alternatives, including the p o s s i b i l i t y o f m a k i n g a renewed offer for Qantas at $A5.45 per share," APA said.

The previous offer was also $A5.45 a share.

The world’s largest airline takeover bid failed after APA failed to reach the 50% level of acceptances needed to extend the bid by a deadline on Friday.

Australia’s Takeover Panel rejected an application by APA over the weekend to include late support from a major s h a r e h o l d e r who missed a deadline for acceptances.

APA said the late acceptance brought it up to 50.6%. Reaching 50%, gave APA another two weeks to gain the 70% threshold for a successful takeover.

The Australian Securities and Investments Commission said yesterday it had also refused an application by APA over the same matter.

Mr McIntyre said analysts’ reports from Australia suggested that top politicians and union leaders were happy the deal had collapsed. The Australian budget was due out today and the takeover deal would have taken some of the media attention away from treasurer Peter Costello.

The collapse of the deal also showed that APA, and other privateequity funds, might have to lift their bids for take over targets.

"I have been talking to a lot of investors today who are happy with the company and who want to be there for five or 10 years. They are saying that if they give up their shares, where will they place the funds? We know that private equity balance sheets have around 70% cash so there is a lot of cash washing around. Those funds might have to think about paying more if they want to succeed."

Shareholders would have noted the improved profit guid ance from Qantas and that analysts were picking an improved dividend. The $A5.45 offer was only a ‘‘modest premium’’ on the share price.

Qantas shares were placed in a trading halt early yester day.

Mr Costello said the future of Qantas was a matter for the current board, but repeatedly called on it to make a public statement regarding its plans.

A bid was put forward to buy Qantas shares which conformed with our requirement that there be majority Australian ownership.

When the time for the bid expired, the majority of share holders had not accepted it. The shareholders didn’t accept it. The bid fails. The bid is over.

Qantas is now being managed by the same board, the same chief executives.

What they intend to do with Qantas is a matter for them and they should make a statement.

They have to now tell you what they intend to do with Qantas.

Source: www.odt.co.nz Read More..

Qantas Airways Says Takeover Is Finished

SYDNEY, Australia -- Qantas Airways said Sunday it considers a 10.8 billion Australian dollar (US$8.9 billion; euro6.55 billion) takeover bid for the airline to have failed, after regulators refused to step in and save it.

The bidder, a private equity-backed group named Airline Partners Australia, refused to accept defeat, saying it would appeal the regulators' decision.

But it appeared to be the end for the troubled, five-month-old bid for the company known as the Flying Kangaroo, and could spell fresh trauma for the airline including pressure on senior management to quit for backing the deal.

"The Qantas board considers that the current bid has failed," the airline said in a statement late Sunday, adding that APA had made several applications to the regulators over the weekend. "Accordingly, Qantas will proceed with strategies and plans for its future," the statement said.

Earlier Sunday, the body empowered by the Australian Securities and Investments Commission to rule on buyouts said it had refused APA's request to allow a bundle of shares it secured after a Friday deadline to be counted as part of its stake in the company.

Without the bundle, the group _ led by Australia's Macquarie Bank and Allco Finance Group and TPG Inc. from Forth Worth, Texas, _ falls short of the 50 percent minimum stake it needed to keep its bid alive for two more weeks. It needed 70 percent to get the loans it needed for the deal.

The decision was another twist in a dramatic weekend for the deal, which would have been one of Australia's largest buyouts.

APA initially announced late Friday night that it had not achieved 50 percent of acceptances and its bid for Qantas had failed. Within hours, it reversed itself, saying a lone stakeholder had given it just enough shares to keep the bid alive _ but after the deadline.

The panel said it saw no reason to allow the latecomer's acceptances to be included.

"The panel does not accept that Qantas shareholders have not had a reasonable opportunity to participate in the offer," it said in a statement. "Shareholders were well aware of the deadlines and the implications of not accepting by the deadlines."

Refusing to concede defeat, APA sought an urgent review of the panel's decision.

Analysts said Qantas' share price will tumble if the bid fails, as hedge funds that bought stock since the bid was launched cut their losses.

Qantas shares closed Friday at A$5.38.

And board members, including Qantas chair Margaret Jackson and chief executive Geoff Dixon, were likely to face intense pressure over the failure.

"I think there's egg on the faces of a lot of people," John Curry, deputy president of the Australian Shareholders Association nonprofit watchdog group, said ahead of the panel's decision.

"The board collectively must take responsibility for the fiasco," he told television's Ten Network.

The board has been criticized for backing the bid because its structure adds a massive debt load to the company while earning senior management and takeover partners such as Macquarie huge fees.

At least one major stakeholder said the A$5.45-a-share offer undervalues Qantas, which has twice upgraded profit forecasts since the bid was launched on Dec. 14 in a surging stock market.

Jackson "was an active supporter of the bid, and certainly if the bid fails ... she would have to reconsider her position," said Brent Mitchell of Shaw Stockbroking. "I think it would be difficult for her to continue."

Dixon was "also in a very difficult position, (though) it may be that the remaining shareholders would like him to continue," Mitchell told Sky News.

Prime Minister John Howard's government approved the bid after a review found it did not breach any foreign investment regulations or laws protecting Qantas from overseas ownership.

Before the Qantas statement was released, Transport Minister Mark Vaile on Sunday said the board must "make a clear statement of their intention for the way forward in the interests of their shareholders and the traveling public."

APA, which initially said the bid was dependent on gaining 90 percent of shares, changed its terms to 70 percent and twice extended the deadline for acceptances after shareholder resistance became apparent.

The 2001 buyout of telecommunications company Optus by Singapore Telecommunications for about A$14 billion is considered Australia's biggest corporate takeover. But this could be overshadowed by retailer Coles Group's plans for a full sale or breakup of the A$19 billion (US$15.6 billion; euro11.5 billion) company.

© 2007 The Associated Press

By Rohan Sullivan, The Associated Press
Source: The Washington Post Read More..