Sunday April 20, 2014

Qantas endgame becomes clear with reports of debt guarantee or govt shareholding

Qantas A380 VH-OQI takes off from Sydney. (Seth Jaworski)

Will the federal government back Qantas? (Seth Jaworski)

The endgame of Qantas’s strategy of lobbying against foreign government ownership of Virgin Australia and its push to have the Qantas Sale Act amended has become clear with reports that Qantas has been seeking loan guarantees from the federal government.

Both Fairfax and News Ltd newspapers on Friday reported that Qantas has written to both the current Coalition and former Labor governments requesting the federal government act as a guarantor for the airline’s debt, with the aim of retaining the airline’s prized investment grade rating with ratings agencies. Any downgrade in the airline’s rating would significantly increase its borrowing costs.

The Australian Financial Review further reports that the federal treasurer Joe Hockey has been in discussions with opposition transport spokesman Anthony Albanese over the government potentially taking a small five-10 per cent equity stake in Qantas, which in effect would act as a credit guarantee for the airline.

The reports come after Qantas CEO Alan Joyce wrote in a letter to staff that he felt it unlikely changes to the Qantas Sale Act would go ahead.

“From our point of view, the urgent and immediate matters at hand will not be fixed by changes to the Qantas Sale Act,” Joyce wrote.

“It’s unclear if the Australian public would support these changes. We don’t think it is realistically achievable in the current parliament. And the process would be prolonged, during which time Virgin Australia would be free to continue its anti-competitive strategy aimed at crippling Qantas. We simply do not have the time.”

Comments

10 Responses to “Qantas endgame becomes clear with reports of debt guarantee or govt shareholding”
  1. David VG says:

    Qantas picked the wrong CEO, just ask Qantas staff or the people he stranded when he suspended services, he riminds me of Christopher Pyne! John Borgetti was the man for that job.

  2. Are you Serious Alan says:

    The predicament Qantas finds itself in, sales Act aside, is all from the making of Alan Joyce and it’s incompetent board and Chairman. Alan has no clear strategy… What is it??? If they actually focused on investing and growing in its core business “the Qantas product” and not starting money sapping Jester businesses across Asia, that are failing – Qantas will have a fighting chance. Alan has a lot to answer for….

    Nick Xenophone is right get the forensic account investigators into the running of Qantas group; it’s time for a leadership change at Qantas…

    As for bagging Qantas staff – no doubt there are bad apples amongst every organization, usually this negative culture stems from above, it’s leadership.

  3. A.Y.S.A. says:

    Well said. Can’t agree more.

  4. paul says:

    I can’t make any comments about who runs the airline and I am not from Australia but I am curious to know if you think over the years your government aloud so many landing rights to companies like Emirates who can operate for less money thus causing a huge problem for Qantas?

  5. Dane says:

    I think it’s more a case of other airlines picking up the slack that Qantas left when it scaled back its international services.

    There has always been massive overseas travel demand and people obviously voted with their feet and found better airlines to travel abroad with.

  6. Alex says:

    I can’t wait for the day that QANTAS finally collapses.
    Why does it cost over $600 return from Tamworth to Melbourne, when i can fly to SIN or KUL for less?

  7. Freddie says:

    Alex I agree with you. Brisbane to Bundaberg return is in excess of $800 for a 45 minute flight each way. Virgin on the other hand is $170 return. Presently Virgin can’t achieve any more flights due to Qantas trying to block them out. Well Qantas should be kicked out as they don’t offer anything for the travelling public who want to fly these sectors.

  8. Freddie says:

    RE; Are you serious Alan – The current management of Qantas is exactly described in a book called ‘The fish rots from the head down’ It couldn’t be more appropriate. I feel for the workers of Qantas as they are working in a totally unstable environment which is not of their own making.

  9. Big Jon says:

    Alex and Freddie, I cant believe you wish for 30,000+ people to be out of a job, rather negative of you!

    However you feel about Qantas or Virgin, they both play vital roles in our economy, with employment reaching into the 100,000′s+ that are required to support flight operations by the 2 carriers.

    It would be economic disaster for Australia if QF went under and would push Australia into a big recession with again 100,000+ people out of work, that would have big consequences for everyone.

    Yep I agree the airfares are a rip off, and I cant get over how poorly QF treat their fellow Australians charging the level of airfares they do to fly in a bug smasher.

    This is why Virgin is good for the market and should be given more access to routes and the finance to compete with QF on a bigger scale

    QF has been a bully for years towards other carriers, as soon as Virgin starts a new route, QF immediately floods the market with capacity so Virgin runs at a loss on the route and is hopelessly outgunned trying to compete against a carrier set of wiping them out. Check out the number of flights QF runs in comparison to VA on QLD regional sectors, very ani-competitive.

    QF has had the capacity and the finances for years to bully virgin/tiger/compass and QF are now worried about Virgin accessing some firepower to hit back at QF hard, and will really give them the chance to compete against this big bully Qantas.

    Etihad, Singapore, Air NZ have big plans for Virgin, and they will make sure they have the firepower to outlast any attack from QF.

    I say bring it on, it is a great time in Australian Aviation, for jobs and for the travelling public.

  10. Henry King says:

    QF is crying to the Gov; on the other side it has been a bully for yrs towards other carriers, what a shame, QF.

    “QF has been a bully for years towards other carriers, as soon as Virgin starts a new route, QF immediately floods the market with capacity so Virgin runs at a loss on the route and is hopelessly outgunned trying to compete against a carrier set of wiping them out. Check out the number of flights QF runs in comparison to VA on QLD regional sectors, very ani-competitive.