Company Watch - Qantas Airways.

Mar 5, 2007

Qantas bidder negotiates first hurdle. The Australian Competition and Consumer Commission gave the green light to Airline Partners Australia's proposed A$11.1 billion ($8.74 billion) buyout of Qantas. ACCC Chairman Graeme Samuel said yesterday that there were some potential issues but "there was no likely substantial lessening of competition in each of these cases, having regard to restrictions on related party transactions under the [APA] consortium and the level of competition in the relevant markets." Mar 2, 2007

The key issue was the proposed dual ownership of shares in Qantas Airways and its main base, Sydney International Airport, by Macquarie Bank. "Our assessment indicated that there is a level of influence by Macquarie Bank over Sydney Airport, but that this influence is somewhat mitigated by a series of regulatory and corporate constraints," ACCC said. The deal still has to pass a probe by Australia's Foreign Investment Review Board, which will look at the national interest case. The Australian Senate also will vet the deal. APA said yesterday it "has worked with the ACCC constructively to address all relevant issues in relation to our bid. This is consistent with [our] approach to fully cooperate with all relevant government departments and regulators." Mar 2, 2007

Australia's Qantas, another OneWorld member, in December 2006 agreed to a takeover bid by Airline Partners Australia, a consortium which includes private equity firm Texas Pacific Group, Allco Equity Partners, Allco Finance Group and Canadian investment firm Onex. In Qantas' case, the airline was interested in talking as it saw itself constrained by a share market that has not recognized the group's value and limits its ability to raise the capital it needs to fund its fleet and growth plans. Mar 1, 2007

Australian pilots' union files suit in bid to block Qantas takeover, claiming breach of 1992 privatization terms. A Qantas Airways pilots' union is to launch legal action against the carrier in the hope that it will jeopardize a proposed takeover by a private equity group. Feb 26, 2007

The Australian and International Pilots Association (AIPA) says in a statement that it will today launch legal proceedings in Australia's Federal Court that "could put in doubt the private equity takeover of Qantas". It says the action is being launched under the 1992 Qantas Sale Act, seeking a ruling that the current operation of international services by Qantas' low-cost unit Jetstar is unlawful. It claims that Qantas is in breach of Section 7(f) of the Qantas Sale Act, which prevents it from operating international passenger services under any other name. "If our case succeeds the entire Jetstar International strategy - where a separate entity is created to hollow out Qantas - would breach the Qantas Sale Act and the minister for transport would be obliged to intervene," says AIPA president Capt Ian Woods. Qantas shareholders are currently assessing an offer from a group of local and foreign investors seeking to take over the airline for more than A$11 billion ($8.7 billion). Unions have expressed opposition to a takeover, fearing it will lead to job losses. AIPA says it is the largest pilot body in Australia, representing more than 2,300 pilots and flight engineers working for Qantas Group carriers Qantas Airways, Australian Airlines, Jetstar, Eastern Australia Airlines and Sunstate Airlines. Feb 26, 2007

Airline Partners Australia's A$11 billion ($8.8 billion) bid for Qantas has hit turbulence, with two key stakeholders suggesting that the $A5.60-per-share offer undervalues the airline. According to Australia's Financial Review, UBS Global Asset Management, which holds 6% of QF, is unwilling to sell while Balanced Equity Management, with 3%, is unconvinced. APA has said its offer is conditional on 90% acceptance. Yesterday it extended the bid period to April 3 as investigations by the Australian Competition and Consumer Commission and Foreign Investment Review Board have yet to be completed. Both reports are due within days. Mar 1, 2007

Qantas Group selected the General Electric GEnx to power its fleet of up to 115 787s. CFO Peter Gregg called the choice "a difficult one following an exhaustive eight-month evaluation process." The initial order is for engines for 45 firm aircraft and was valued by Qantas at A$2 billion in "capital and maintenance costs over the life of the engines." It gives the GEnx a significant edge on 787 customers, with orders for 216 aircraft compared to 125 for the Trent 1000. Feb 28, 2007 03/05/2007

Editor: Aram Gesar, eMail: [e-mail] For Air Transport & Travel Business Experts contact eMail: [e-mail]

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Feb 26, 2007