BA to cash in its pounds 425m Qantas shareholding.

British Airways yesterday announced plans to sell its shares in the Australian flag carrier Qantas, which are expected to make it around pounds 425m.

BA said it intended to offload its 18.25pc shareholding in Qantas by way of an underwritten offering managed by an international bank.

BA intends to use the proceeds to repay part of its existing gross debt, which in June amounted to pounds 5.6bn.The airline bought its original shareholding in Qantas in 1993 for $665m (pounds 304m). BA chief executive Rod Eddington said: "Our shareholders have had a good return from our investment in Qantas.

"We now believe it is in our best interests to sell our shares to pay down our debt and continue to strengthen our balance sheet. A strong balance sheet will place British Airways in a robust position for any future European consolidation.

"The share sale has no impact on the existing business relationship between the two airlines and is not linked to our joint services agreement (JSA) which continues. The JSA is a strong, well established relationship which brings real commercial benefits to both British Airways and Qantas."

The JSA between British Airways and Qantas has recently been given draft approval for a five-year extension by the Australian Competition and Consumer Commission. It includes joint flight schedules, sales and operations between Australia, South East Asia, the UK and Europe.