Australia's Qantas Airways is expected to soon move ahead with a spin-off of its frequent flyer programme, possibly through an initial public offering.
Qantas recently unveiled major enhancements to its Qantas Frequent Flyer programme to make it easier for members to use their points to book award tickets, such as by allowing members to use points to book seats on any flight operated by Qantas or subsidiary Jetstar. In announcing the changes, it said a decision was due at its next board meeting in August on the future ownership structure of the programme. An IPO, similar to what Air Canada did with its Aeroplan programme in 2005, appears to be the favoured option.
"Under active consideration for the future of the programme is a partial initial public offering, potentially for completion in 2008," says Qantas chief executive Geoff Dixon. "The improvements to the programme over the past 12 months have reinforced our view of the value of the Qantas Frequent Flyer programme as a standalone business."
Qantas has said for some time that it is considering a partial sale of the programme, either through a private placement or IPO, in line with efforts to create more value through a "segmentation" of the airline group's main businesses. Qantas has been looking at selling off various parts of its business since early last year. It says Qantas Frequent Flyer has more than five million members, with more than 5,000 new members joining each week.
The programme generates 60% of its revenue outside the airline and Qantas believes it has "excellent growth prospects". Qantas Frequent Flyer has, since earlier this year, been reporting its earnings on a standalone basis. For the six months ending 31 December 2007 Qantas Frequent Flyer recorded a profit before tax of A$62 million ($60 million) on revenue of A$399 million.
Source: Airline Business
