Pilots go after APA’s overstated bidder statements

A report in The Australian today says that it is not clear from yesterday’s Takeovers Panel statement in what capacity the Australian and International Pilots Association has applied for a declaration of unacceptable circumstances in relation to the Airline Partners Australia $11 billion consortium bid for Qantas Airways.

Is it as a shareholder of Qantas, if not, does it claim to represent the interests of some pilots who hold shares in Qantas, or does it claim to have standing simply in its capacity as a union representing some Qantas employees?

The Corporations Act sets out who can and cannot apply to the panel for a declaration of unacceptable circumstances.

It comprises the bidder and the target company, the corporate regulator ASIC and “any other person whose interests are affected by the relevant circumstances”.

The panel says AIPA claims there are deficiencies in the disclosures made by the APA bidders, concerning the experience in the aviation industry of one of the consortium members, Texas Pacific Group, APA claiming in the bidder’s statement that the members of the consortium bring “substantial aviation experience” to Qantas, which AIPA effectively contends that in TPG’s case its experience has been over-stated.

The bidder’s statement mentions investments by TPG in two US domestic airlines, Continental and America West and in the Irish-based Ryanair and that TPG played an important role in transforming Continental from one of the worst-performing airlines in the US to one of the world’s leading full-service airlines, helping rebuild America West and that Ryanair today is one of the most successful low-cost airlines in the world.

AIPA contends that the bid document neglects to mention that TPG sold out of those investments years ago, and that it invested in America West for only 12 months and in Ryanair for 18 months.

Last Friday APA issued a supplementary bidder’s statement in which it said that Qantas shareholders should take note that after playing a significant role in those three airlines, TPG today does not retain any remaining interest in them.

AIPA apparently contends that clarification doesn’t go far enough and wants additional disclosure.

APA is offering cash so that the experience of the consortium bidders has relevance only if there are minority shareholders remaining after the close of the offer.

Although APA has left itself the right to waive its 90% minimum acceptance condition, it’s most unlikely that it would do so, this is, after all, a leverage private equity bid.

The panel’s brief relates to takeovers, so even if AIPA is correct and TPG’s involvement in the aviation industry is exaggerated, it’s not clear how that affects AIPA, or even that the union has any “interest” in the bid.

It’s possible a case could be made that unions have an interest in relation to a bidder’s intentions concerning employees, which must be included in the bidder’s statement.

In that regard APA stated that it was supportive of continuing Qantas’ track record of “offering competitive conditions, jobs growth and career opportunities, but it would appear that AIPA has made no complaint in that regard.

The panel said yesterday that it hasn’t decided whether to conduct proceedings, with its first decision is not whether there is sufficient substance to warrant a hearing, but whether AIPA has standing to bring an application.

This might be an instance where the panel should seek the guidance of the courts.

The plot thickens!

Report by The Moel from The Australian