THE AUSTRALIAN Government has slashed the expected price of its remaining 75% stake in Qantas, in a bid to boost the privatisation, which has been flagging in the face of weak financial markets and expectations of a poorer operating performance from the airline group.
Estimates for the price of the sale have been cut by A$500 million ($360 million), to around A$1,350-$1,550 million. Forecasts for the group's financial performance, included in the share prospectus, have helped to dampen market expectations.
The estimate is that operating profits will fall back slightly, to $471 million, for the financial year to the end of June after a poor second-half performance. Net profit is forecast to grow slightly, however, because of falling interest charges.
Financial analysts caution that the estimates appear to rely heavily on projected growth in traffic and yields, as well as strong cost savings. In the run-up to the float, Qantas also faces possible industrial action by airport workers and pilots.
Under the offer, which opened on 3 July, shares are available to institutional and private investors, with around 7 million shares also reserved for employees. British Airways will be allowed to purchase additional shares to avoid any resulting dilution of its 25% stake, for which it paid $665 million.
Source: Flight International
