Qantas chief says BA talks face hurdles
By Peter Smith in Sydney
lunedì dic 8 2008 03:40
Alan Joyce, Qantas new chief executive, refused to be drawn on whether meetings with Willie Walsh, his British Airways counterpart, in Hong Kong at the weekend had advanced the two airlines' "merger of equals" discussions.
Speaking publicly on Monday for the first time since taking the helm at the Australian carrier last month, Mr Joyce also cautioned there were "significant hurdles" to overcome to complete a deal and complained the situation had been made more difficult after news of the talks spilled into the open last week.
"We are exploring a potential merger with British Airways via a dual-listed company structure. We are in these discussions because a merger has the potential to create the global scale that would allow us to grow and enhance our services, and deliver significant revenue and costs synergies," Mr Joyce told an Australia-Israel Chamber of Commerce lunch in Sydney.
He said the hurdles to the deal included BA's pension fund liabilities, the split in the merger ratio that would define each airlines' economic interest, and the current economic environment.
"Doing it in the spotlight is not ideal," he said, adding it was "not appropriate" to discuss the timing of any potential deal or whether Qantas would take a lead role in the merger.
He also a ruled out a three-way deal including Iberia, the Spanish airline that is simultaneously in talks with BA.
"BA and Iberia and us are all conscious that only one of the transactions can take place," he said. He refused to be drawn on reports BA favoured the Australian carrier over its Spanish rival.
Fernando Conte, Iberia's chief executive, last week said that BA must choose between the Spanish carrier and Qantas, saying it would be "too complex" for the British carrier to pursue both deals.
Combining BA and Qantas would create an airline with revenues of £16.6bn ($25bn) and a fleet of nearly 500 aircraft. BA flies to 154 destinations, while Qantas services 85.
Mr Joyce stressed Qantas was well placed to take a lead role in industry consolidation.
"We are looking at a range of options but there is nothing on our plate at the moment that may occur in Asia," he said. The talks with BA did not preclude Qantas "doing something in Asia eventually".
"There is a reasonable chance this [merger with BA] will not go ahead," he said.
Mr Joyce also said hit out at the uneven playing field operating in global aviation resulting from the rise of state-backed carriers, particularly those from the Middle East.
"The Middle Eastern carriers, they are driven on building states rather than commercial enterprises," he said. "These guys seem to have money coming out of their ears."
However, he said he was comfortable with the Australian government's stipulation that the airline stays majority Australian-owned and welcomed its move to reconsider allowing a single investor to own up to 49 per cent of the airline, from the current 25 per cent ceiling.
"Whatever happens, Qantas will remain majority Australian-owned, the vast majority of our employees will always be Australian, and Australia will remain our headquarters," he said.
Qantas shares close 16 cents higher at A$2.38, giving the airline a market value of A$4.5bn. BA shares gained 5.7p or 3.7 per cent to 160.1p in early London trading.
Qantas is being advised by Macquarie and Greenhill, while UBS is acting for BA.
Financial Times
By Peter Smith in Sydney
lunedì dic 8 2008 03:40
Alan Joyce, Qantas new chief executive, refused to be drawn on whether meetings with Willie Walsh, his British Airways counterpart, in Hong Kong at the weekend had advanced the two airlines' "merger of equals" discussions.
Speaking publicly on Monday for the first time since taking the helm at the Australian carrier last month, Mr Joyce also cautioned there were "significant hurdles" to overcome to complete a deal and complained the situation had been made more difficult after news of the talks spilled into the open last week.
"We are exploring a potential merger with British Airways via a dual-listed company structure. We are in these discussions because a merger has the potential to create the global scale that would allow us to grow and enhance our services, and deliver significant revenue and costs synergies," Mr Joyce told an Australia-Israel Chamber of Commerce lunch in Sydney.
He said the hurdles to the deal included BA's pension fund liabilities, the split in the merger ratio that would define each airlines' economic interest, and the current economic environment.
"Doing it in the spotlight is not ideal," he said, adding it was "not appropriate" to discuss the timing of any potential deal or whether Qantas would take a lead role in the merger.
He also a ruled out a three-way deal including Iberia, the Spanish airline that is simultaneously in talks with BA.
"BA and Iberia and us are all conscious that only one of the transactions can take place," he said. He refused to be drawn on reports BA favoured the Australian carrier over its Spanish rival.
Fernando Conte, Iberia's chief executive, last week said that BA must choose between the Spanish carrier and Qantas, saying it would be "too complex" for the British carrier to pursue both deals.
Combining BA and Qantas would create an airline with revenues of £16.6bn ($25bn) and a fleet of nearly 500 aircraft. BA flies to 154 destinations, while Qantas services 85.
Mr Joyce stressed Qantas was well placed to take a lead role in industry consolidation.
"We are looking at a range of options but there is nothing on our plate at the moment that may occur in Asia," he said. The talks with BA did not preclude Qantas "doing something in Asia eventually".
"There is a reasonable chance this [merger with BA] will not go ahead," he said.
Mr Joyce also said hit out at the uneven playing field operating in global aviation resulting from the rise of state-backed carriers, particularly those from the Middle East.
"The Middle Eastern carriers, they are driven on building states rather than commercial enterprises," he said. "These guys seem to have money coming out of their ears."
However, he said he was comfortable with the Australian government's stipulation that the airline stays majority Australian-owned and welcomed its move to reconsider allowing a single investor to own up to 49 per cent of the airline, from the current 25 per cent ceiling.
"Whatever happens, Qantas will remain majority Australian-owned, the vast majority of our employees will always be Australian, and Australia will remain our headquarters," he said.
Qantas shares close 16 cents higher at A$2.38, giving the airline a market value of A$4.5bn. BA shares gained 5.7p or 3.7 per cent to 160.1p in early London trading.
Qantas is being advised by Macquarie and Greenhill, while UBS is acting for BA.
Financial Times
