Quotes: MENA   Enter Symbol: NewsLetter: Search: advanced

Qantas opens door to foreign investors  Join our daily free Newsletter

MENAFN - Arab News - 28/08/2014
No. of Ratings : 0
Add to Mixx!



(MENAFN - Arab News) SYDNEY: Qantas Airways Ltd. is looking past its record annual loss and predicting blue skies ahead as a landmark change in Australian laws opens the door to foreign investment in the airline's international arm its biggest headache.

A funding injection into its international division would allow Qantas to better compete on price and service offerings with rivals whom it says are bolstered by unlimited funding from wealthy state backers.

It would also support Qantas' plans to re-configure its aging fleet invest resources in popular routes and further enlarge its global network partly through its partnership with Emirates Airline.

Qantas said it expected to return to profit sometime in the current financial year.

The surprisingly positive outlook gave the airline's shares their largest one-day percentage gain in a year.

The so-called 'Flying Kangaroo' has been bruised by high fuel costs a strong Australian dollar increasing international competition and a domestic price war with arch-rival Virgin Australia Holdings.

Qantas International has been the biggest drag on the airline's earnings with its loss for the year ended June 30 the largest among the carrier's divisions and doubling from a year earlier.

Aviation experts also point the finger at Chief Executive Alan Joyce and his management team criticizing ill-fated moves such as the rollout of its low-cost Jetstar subsidiary in an already crowded Asian market.

Joyce acknowledged that a record A2.8 billion (2.6 billion) annual net loss and an underlying loss before tax of A646 million were 'unacceptable' but vowed that 'the worst is over.'

The headline loss was almost entirely due to a A2.6 billion non-cash writedown in the value of Qantas' fleet as it restructured to take advantage of new domestic laws allowing greater foreign investment.

In the biggest restructure since Qantas was privatised two decades ago the airline is hiving off its international arm from its domestic unit. The move will allow a foreign airline to take as much as a 49 percent stake a major change from the previous 35 percent limit.

'The changes to the Qantas Sale Act have removed a significant impediment for Qantas to be involved in long-term consolidation' Chief Financial Officer Gareth Evans said in Sydney.

'By providing a separate subsidiary you give an option for a foreign investor to take equity directly in the international business' he said.

Still analysts cautioned the airline against expecting a rush of foreign investors on its doorstep any time soon with current alliance partner Emirates seen as the only likely candidate.

'I think the most logical partner would be Emirates because they've already got relations with them but there is a lot of speculation that continues to occur and the business should just focus on improving its underlying operations' said David Liu head of research at Above The Index Asset Management Pty Ltd.

Joyce said that foreign investment was a long-term strategy and the focus remained on a A2 billion turnaround program that includes stripping costs freezing capacity and slashing 5000 jobs.

'We are focused now in the short to medium term on the transformation program' he said. 'We are not actively out there looking for an airline investor.'

Qantas shares were up 7.3 percent in midafternoon trade at A1.39 a three-month high and the biggest intraday gain in a year. The stock reached an all-time high of A6.05 in 2007 before the global financial crisis hit.

BLUE SKIES

The headline A2.8 billion loss overshadowed a smaller-than-expected underlying loss before tax of A646 million compared with a restated A186 million profit a year earlier. Analysts had on average anticipated an underlying loss around A750-770 million.

Joyce said there was a 'clear and significant' easing of both international and domestic capacity growth and the airline expected 'rapid improvement' in its financial performance with a return to underlying profit before tax in the first half of the current year.

Bell Potter analyst John O'Shea said there was evidence that domestic airfares have stabilized which was a positive sign for the sector generally but added that Qantas needed to commit to backing away from its price and capacity war with Virgin.

Analysts expect Virgin to post a A250-270 million pre-tax loss when it reports earnings on Friday with both airlines caught out by excess capacity in global markets and moves by international carriers to increase capacity into Australia.

'Looking at how bad the result is maybe it will be a catalyst for them (Qantas) to actually behave more rationally in relation to pricing' O'Shea said.

Joyce said that Qantas would extend a freeze on increasing domestic capacity into the first half of the current year.

In stark contrast to the Australian carriers Air New Zealand Ltd which owns around 26 percent of Virgin Australia on Wednesday reported a 44 percent jump in annual net profit to NZ262 million.

The New Zealand flag carrier also said it planned to significantly grow capacity this year.

Despite an investor push for major asset sales Joyce said a review of its profitable Frequent Flyer loyalty scheme which analysts value at up to A2.5 billion had concluded there was 'insufficient justification' for a partial sale.

However he said the airline had identified other potential asset sales including airport terminals property and land holdings.

Any proceeds from such sales would be used to repay debt.

 


Arab News




  MENA News Headlines
 Dec 22 2014 - Kuwait- Al-Azemi wins endurance horse raceArab Times
(MENAFN - Arab Times) KUWAIT CITY Dec 21 (KUNA): Female equestrian Abrar Al-Azemi won the 'Al-Qudra wa Al-Tahammul' (capability and endurance) horse race held on Sunday as part of the Kuwait's Fifth ...

 Dec 22 2014 - Saudi Kuwait say no oil output slash even if non-OPEC nations doArab Times
(MENAFN - Arab Times) ABU DHABI Dec 21 (AFP): The Saudi and Kuwaiti oil ministers said Sunday that their countries would not cut oil production even if non-OPEC members reduce their output to shore ...

 Dec 22 2014 - Kuwait: 1760 illegal residents get drivers' licenses in '14Arab Times
(MENAFN - Arab Times) KUWAIT CITY Dec 21 (KUNA): A total of 1760 drivers' licenses were issued for illegal residents in the first nine months of 2014 the Central Agency for Remedying Illegal ...

 Dec 22 2014 - Iraq premier thanks Kuwait for compensation defermentArab Times
(MENAFN - Arab Times) KUWAIT CITY Dec 21 (KUNA): Visiting Iraqi Prime Minister Haider Al-Abadi expressed his gratification at the Kuwaiti government's acceptance to defer Iraq's payment of ...

 Dec 22 2014 - Saudi King's bid to heal Qatar-Egypt ties hailedArab Times
(MENAFN - Arab Times) KUWAIT CITY Dec 21 (KUNA): His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah on Saturday sent a cable to Saudi King Abdullah bin Abdulaziz Al Saud to congratulate ...

 Dec 22 2014 - Kuwait- Al-Sanea opens Awqaf Forum on 'behalf' of Crown PrinceArab Times
(MENAFN - Arab Times) KUWAIT Dec 21 (KUNA): Minister of Justice and Minister of Awqaf and Islamic Affairs Yaqoub Al-Sanea on Sunday said stability of legislative and executive powers led to achieving ...

 Dec 22 2014 - Kuwaitis to visit UK easily via e-visa by 1st half 2015Arab Times
(MENAFN - Arab Times) KUWAIT CITY Dec 21 (KUNA): The Kuwaiti-British committee tasked with bolstering bilateral relations was due to hold a meeting in Kuwait last week but it was delayed till early ...

 Dec 22 2014 - UAE- Watch: A spacecraft's trial by fire as it returns to EarthKhaleej Times
(MENAFN - Khaleej Times) The video begins 10 minutes before Orion's splashdown in the Pacific Ocean just as the spacecraft was beginning to experience the Earth's atmosphere. New York: A video ...

 Dec 22 2014 - UAE- Video shows Boko Haram killing captivesKhaleej Times
(MENAFN - Khaleej Times) Boko Haram militants have released a new video showing gunmen mowing down civilians lying face down in a dorm googletag. A new video from Nigeria's home-grown Boko Haram ...

 Dec 22 2014 - UAE- Kate Winslet in Jobs movieKhaleej Times
(MENAFN - Khaleej Times) Given the pedigree of the pic its no surprise Winslet was drawn to the role. Kate Winslet is in negotiations for the female lead in Universal’s Jobs the biopic of the ...

more...


 






Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country

Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Economic Calendar
Financial Glossary


Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2014 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help