With its long awaited A$2 billion (US$1.4 billion) public flotation now in sight, Qantas has taken steps to reassure prospective local investors that privatisation is not a step on the way to integration with 25 per cent stockholder British Airways, and that the company remains committed to European markets.
'We have decided that the word integration does not exist when we are dealing with BA,' says group executive general manager commercial Geoff Dixon. While the relationship is strong, 'it is still one of them being a 25 per cent shareholder', he adds.
Qantas is now moving to strengthen its lengthy relationship with American Airlines. American already has a codeshare arrangement on Qantas flights from Sydney to Los Angeles, with Qantas codesharing on AA services from LA to New York, Washington, Boston and Chicago.
Negotiations are underway to add Miami to the list, a move designed to give Qantas access to American's extensive South American network, although Dixon says the codeshare itself will go only as far as Miami. Also on the agenda - at American's request - is a codeshare on Qantas flights from Auckland to the US, which connect with BA's flights from Los Angeles to London. 'There will be a situation where BA and American will be much closer because of American's association with Qantas,' Dixon says.
With Canberra raising foreign ownership limits to 49 per cent, Dixon stresses that nine of the 13 board members of the new private company, including the chairman, will be Australians. 'Fifty per cent of our business is now done in the Asian region, but it does not mean that we are going to withdraw in any way, shape or form from Europe,' says Dixon. 'Any rumours about us stopping in Bangkok and Singapore and BA taking our passengers on are nothing more than that, rumours.'
The float prospectus was due for release in late June, with the sale date likely in late July or early August. The share price will be decided by tender, but with 750 million shares on offer it is expected to be around A$2.66.
Qantas will be in a position to estimate pretax earnings of around A$320 million (US$230 million) for the year ending on 30 June, enabling it to forecast a profit of about A$450 million for 1995/6.
Analysts believe the float will be successful, with more than sufficient overseas interest to snap up the 24 per cent of the airline available to foreign investors; BA will not be allowed to lift its holding. Despite hesitancy among home investors, the 'mums-and-dads' market is expected to support the offering.
However, problems remain. Australia's domestic travel market has flattened out, and Qantas' earnings potential could be affected by Air New Zealand's bid for half of Ansett Australia.
Source: Airline Business
