Qantas will remain a majority-owned Australian airline even if it merges with British Airways (BA) to create a global carrier to better cope with challenging market conditions, the government said yesterday.
The chief executives of the two iconic airlines have been in merger talks since August as they battle volatile fuel prices and shrinking passenger demand as the world economy creeps into recession.
The Australian Financial Review said the deal would create an A$8 billion (US$5.2 billion) carrier with bases on two continents.
Qantas Airways confirmed in a statement yesterday it was “exploring a potential merger with British Airways plc via a dual-listed company structure” but said that there was no guarantee a transaction would be forthcoming.
But the airline has acknowledged that the industry was heading towards a period of consolidation and as recently as last week said that it would be in Qantas’ interests to merge with a rival sooner rather than later.
Treasurer Wayne Swan said there was no proposal yet before the government but any merger would have to abide by the regulation that foreign ownership of Qantas be limited to 49 percent.
“Our bottom line is that the ‘flying kangaroo’ remains majority Australian owned and based,” he told reporters in Canberra.
But the government has hinted it will alter other foreign ownership rules, which currently limit individual foreign airlines to a 25 percent holding and aggregate foreign airline interests to a 35 percent stake.
Transport Minister Anthony Albanese said under current law Qantas’ base must remain in Australia, it must retain its name and be incorporated in Australia, and its chairman and at least two-thirds of its board must be Aussie citizens.
“To think that the ‘flying kangaroo’ would disappear is a bit like thinking that the Sydney Opera House would be bulldozed,” he said.
Talk of a merger between Qantas and BA, which formerly held a 25 percent stake in the Australian carrier but had sold out by 2004 to pay off debts, comes amid moves toward consolidation of the sector in Europe and the US.
BA is continuing in talks to link up with Iberia while reports here said Qantas could be included in a “three-way” deal with the Spanish carrier.
Neil Hansford, chairman of Strategic Aviation Solutions said Qantas’ rivals, including Singapore Airlines, would be unhappy with the news, but a merger with BA made the most sense.
“Qantas has got a choice, it either gets into bed with somebody like BA or [German carrier] Lufthansa or it retreats to being an Asian carrier with a couple of routes to Europe,” he said.
“It will allow Qantas to stay servicing Europe meaningfully and it makes it [in combination with BA]) about the third biggest fleet in the world,” he said.
Brent Shaw, research manager with Shaw Stockbroking, said Qantas had realized it had to “change and move with the times to survive.”
Qantas shares gained on the news of the possible merger, closing up US$0.10, or 4.4 percent, at US$2.35 in an overall lackluster market.
But some traders said Qantas, one of the world’s most profitable airlines, would be unwise to link itself to a carrier with a less robust bottom line.
“Qantas has low debt, a protected US-Australia route and an oligopoly on one of the most profitable short-haul legs in the world between Melbourne and Sydney,” Goldman Sachs JBWere senior trader Patrick Crabb said.
“If I am a shareholder of Qantas, my initial response is cold feet, as the potential groom has a good name but his short-term financial prospects look challenged,” he said.
Taiwan last night blanked world No. 1 Japan 4-0 to win the World Baseball Softball Confederation’s (WBSC) Premier12 for the first time. Taiwanese ace Lin Yu-min (林昱珉) held defending champions Japan to just one hit and no runs in the first four innings, before catcher Lin Chia-cheng (林家正) opened the fifth inning with a solo home run. That was soon followed by a three-run homer from Taiwanese captain Chen Chieh-hsien (陳傑憲) to put Taiwan ahead in the prestigious tournament of the world’s top 12 baseball teams. In addition to a superb performance from 21-year-old Arizona Diamondbacks prospect Lin, three more Taiwanese pitchers
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday held an equipment installation ceremony for its first 2-nanometer fab in Kaohsiung, six months ahead of schedule, Kaohsiung Mayor Chen Chi-mai (陳其邁) said. “To cope with the strong global demand for advanced chips, TSMC is to start moving in equipment for its first-ever 2-nanometer fab half a year earlier than scheduled,” Chen said at an question-and-answer session at the Kaohsiung City Council. TSMC’s 2-nanometer process technology would help accelerate the development of artificial intelligence (AI) applications as well as the transformation of local industries in Kaohsiung, Chen said in a
TEAM TAIWAN: While lawmakers proposed declaring Nov. 24 a national day, the CPBL commissioner urged the legislature to pass the budget for sports development Lawmakers yesterday proposed designating Nov. 24 as National Baseball Day and updating the design of the NT$500 bill to honor the national team’s victory in the World Baseball Softball Confederation’s Premier12 championship on Sunday, as thousands of fans came out to see the players parade down the streets of Taipei. Players, coaches and staff from the national team returned home on Monday night after achieving their best-ever performance in an international baseball tournament. After receiving a rapturous welcome at the airport, the players turned out yesterday for a street parade in front of thousands of adoring fans waving Taiwanese flags and
Taiwan moved clear of Mexico to be the only country at No. 2 in the World Baseball Softball Confederation (WBSC) Men’s Baseball World Rankings. Meanwhile, draft bills to set up a ministry of sports were approved at a joint session at the legislature in Taipei yesterday. After previously being tied with Mexico for second on 4,118 points, Taiwan moved clear on 5,498 points after they defeated Japan in the final of the WBSC Premier12 tournament on Sunday. Mexico (4,729) dropped to fourth, behind Venezuela (4,846), who finished fourth at the tournament. Taiwan narrowed the gap to first-placed Japan to 1,368 points from 1,638, WBSC
RSS