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95% of investors shun Qantas share purchase plan

written by Adam Thorn | August 10, 2020
Qantas Boeing 747-400 VH-OJT takes off from Brisbane Airport. (James Baxter/Qantas)
Qantas Boeing 747-400 VH-OJT takes off from Brisbane Airport. (James Baxter/Qantas)

Just 5 per cent of Qantas investors have taken up an offer to purchase discounted shares in the airline – leaving the business with a potential $430 million funding shortfall.

A statement released to the ASX on Monday morning blamed the poor take-up on tightened border restrictions and the COVID-19 outbreak in Melbourne.

Qantas said in June it was “determined to raise up to $500 million” from the scheme – but ended up generating just $71.1 million.

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“The timing of these events and their implications for travel demand had an obvious impact on the Qantas share price and the take-up of the share purchase plan [SPP] offer by eligible shareholders,” said a spokesperson.

In total, only 8,660 out of 173,343 investors took part in the share purchase plan to raise money for the airline, which allowed them to buy stock free of any brokerage, commissions and transaction costs and at a discount of 2.5 per cent.

“The timing of the SPP coincided with a series of tightened border restrictions across Australian states and territories, sparked by a COVID-19 outbreak in Melbourne and small clusters elsewhere,” it said.

Shares in Qantas are currently trading at $3.33 – down from a high of more than $7 in December 2019 but well up on a low of just over $2 in March.

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Last week, Australian Aviation reported that Queensland’s surprise decision to shut its border to Sydney caused the business to axe almost one-third of its schedule.

Chief executive Alan Joyce also said the airline is operating at 20 per cent pre-COVID-19 capacity, and not the 45 per cent it hoped to run before borders across Australia were hardened.

“What we’d like to see is real certainty over what’s going to happen with borders and different approaches being taken by different states,” Joyce said. “The principle we all agree on is that health has to be the top priority but the medical experts have said it’s not elimination we’re after, it’s suppression.”

He argued that the current situation had caused “a huge amount of uncertainty” that made it hard to fix on “one potential outcome”. He called the early retirement of the 747 and job losses “heartbreaking”.

Those comments came before Queensland hardened its border yet again at the weekend to all-but lock out all of NSW and the ACT.

The decision meant that, from 1am on Saturday, 8 August, only Queensland residents who have travelled through ‘hotspot’ areas are allowed to return to their home state, and those that do must quarantine at a government facility for 14 days.

Premier Annastacia Palaszczuk said the restrictions were taken after receiving advice from chief health officer Dr Jeannette Young.

“We’ve seen that Victoria is not getting better and we’re not going to wait for NSW to get worse,” said Premier Palaszczuk. “We cannot risk a second wave, we have to act decisively.”

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5 Comments

  • Steve A

    says:

    Not surprisingly 95% of shareholders have decided not to give Qantas any more money. Qantas has received a billion dollars of taxpayer’s money since the COVID outbreak, for jobs preservation, air services subsidies etc…
    So much for AJ telling the government not to give money to badly run companies, of which QF is one.
    QF has been quietly selling off its family silver, the SYD and MEL terminal assets, Q Catering and Snap Fresh, and did you even notice that after the Jetstar Hong Kong debacle of a few years ago, now Jetstar Pacific (Vietnam) has passed away? Wasn’t any soap-boxing or chest pounding going on this time around.
    And pretty much all of the QF B789’s are mortgaged to the hilt. And most of the balance of the QF fleet are too ancient to borrow against.
    And, QF has sent 11,000 plus of their valuable people for parting-out since AJ took over.
    So, what have QF shareholders got to look forward to in the future? Well, firstly, AJ is likely to follow the Chinese and Russian leaders and make himself CEO for life. But secondly, as history already shows us, QF shareholders are likely to go another 7 years without dividends, as in fact AJ has previously done to them in the past. And if and when QF is in the money again, apart from paying down debt, there will be big QF management bonuses to fork out for before shareholders see a penny. Management will have saved QF, after all, not the taxpayer subsidies and taxpayer’s paying for QF staff disposed of so distastefully. And before shareholder dividends, there will be share buy backs. This is a ‘return to the shareholders’ after all, isn’t it? Just like the last 3 billion plus spent on share buy backs during the last couple of years that’s only worth 60% of what shareholders paid for them.
    And, because of the QF ‘granny fleet’, then serious money will need to be spent on new aircraft.
    So, do you think that I’m not a fair dinkum Joycite?
    Do you think that I am getting too cynical as I get older?
    Look at the real facts as they are, not what the QF spin doctors feed to you.

  • Rod Pickin

    says:

    When you consider the constant negativity in word and action from AJ why is he surprised that the masses are not rushing to take up his SPP offer. He needs to identify where the company is now looking to go and with what equipment and when and do it soon otherwise QF will be left in others wake

  • over 80

    says:

    Perhaps it would help if we the shareholders new how % much of the bottom line is going to senior management by way of bonus/salary/share awards etc compared to the amount passed on to ordinary management and employees and how much to shareholders, AJ $500,000 a week must be a big slice.

  • Patrickk

    says:

    Steve A a bit rough you blaming AJ for the border closures. The government did that and and Aussies from O/S travel.. You may not have noticed but there is a global a pandemic and QANTAS is surving better rthan most. N ot sure they received billions in government subsidies it would be millions at most and it would mainiy be in the form of fee waivers, to keep uneconomic flights operating I am not sure what is wrong with that.. Virgin g the same deal even when they were in administration.

  • Steve A

    says:

    Patrick, of course I don’t blame AJ for the border closures or COVID 19, but QF has been short on quality management for a very long time now. QF shareholders have been used and abused during AJ’s tenure. He’s received an average of $8 million pa, whilst they averaged just 8 cps pa during his time at the top. Who’s the QF management actually working for? The people who actually own the airline or the management? Everything points to the management, because QF shareholders always come last.
    One of the big problems is STIP and LTIP, rewarding them for things that they shouldn’t be rewarded for, and not putting shareholders, customers, staff, and Australia first.

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