The champagne bubbles were just settling after the successful conclusion of the Qantas privatisation when a handful of brushfires began throwing out sparks, potentially damaging projections of profitability.

First, freight handlers walked off the job over a range of issues, including manning levels at Sydney Airport. They were back within two days but had halted freight operations.

Signs then emerged that a nasty bilateral dispute with Hong Kong over Qantas' fifth freedom rights out of the colony may be tough to solve. The two had agreed to abandon threatened bans on their respective airlines and renegotiate the air services agreement, but new talks in August showed neither government was prepared to give ground. This raises the spectre of flight disruption next year.

Qantas also faces a price war on the lucrative Japan route, where Japan Airlines plans to cuts some fares by 4.5 per cent from October.

All this came amid confusion over the sale of too many shares to foreign buyers in the final days of the A$1.45 billion ($1.1 billion) float. Off- shore interests purchased enough shares to push foreign ownership to 53 per cent - the limit is 49 per cent. Chairman Gary Pemberton pointed out Qantas had the power to make the owners sell, and that Australian ownership was never in doubt.

Meanwhile, Air New Zealand refuses to give up its bid to buy a half share in Australian domestic Ansett from Rupert Murdoch's News Corp.

Talks are off for the moment but the Auckland-based flag is ignoring statements from News that it is now a 'long-term' investor in Ansett and won't sell. Air NZ insiders say the carrier still wants to buy.

Source: Airline Business