Qantas shares closed a modest 4.4% higher on the Sydney stock exchange today, at AUD2.35, on 50% higher volume than average and in a generally higher market. The stock roared up 9.8% shortly after the opening of trade on 03-Dec-08, but faded during the day as concerns grew over the regulatory aspects of any future deal. There are obviously plenty of sellers ready to unload stock as soon as buyers enter the ring.
The Australian Government weighed into the story late today, stating it “believes in an Australian-based and majority Australian-owned Qantas”.
Transport Minister, Anthony Albanese, also sought to clarify that the government has at no stage indicated support for any proposal – “in principle or otherwise”.
Minister Albanese stated there has been no proposal put to the Government for approval of any Qantas/British Airways merger, adding any proposal “would need to comply fully with Qantas’s obligations under the Qantas Sale Act, the Foreign Acquisitions and Takeovers Act, the Trade Practices Act and Australia’s international Air Services Agreements.
The Qantas Sale Act 1992 requires that:
- Qantas’s main operational base and headquarters must remain in Australia;
- Total foreign ownership not exceed 49 per cent, no single foreign interest exceed 25%, and total foreign airline ownership not exceed 35%;
- The name of Qantas must be preserved for the company’s scheduled international passenger services;
- The company must be incorporated in Australia;
- At least two-thirds of the board of Qantas must be Australian citizens; and
- The Chairman of the board must be an Australian citizen.
The Government’s Aviation Green Paper, released yesterday, indicated the Government would consider reviewing the additional ownership restrictions that only apply to Qantas, not other Australian international airlines.
Minister Albanese continued, “the Government has made clear that no consideration is being given to changing any other section of the Qantas Sale Act”.
All eyes now turn to the UK and how British Airways investors digest today’s action at the other end of the Kangaroo Route.