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