Qantas APP deal still very hazy!
With Qantas releasing a 2008 earnings and profit outlook yesterday in response to massive market pressure, declaring it at the upper end of the scale, yet also issueing caveats regarding a range of factors it had not taken into account, the potential success or failure of the APP bid is still very hazy and probably even more confused.
Qantas said yesterday that it expected its pre tax profit to be about $1.23 billion for the year to June 30, 2008, but by then going on to say why it might not reach that target in a hedge sitting approach that is now concerning many analysts.
With the challenges quotes as including whether Qantas can secure the additional aircraft it needs, the entry of LCC Tiger Airways, Virgin Blue’s extra capacity and aircraft and issues realted to freight, the statment said
“These developments are likely to have a negative financial impact on Qantas in 2008,” Qantas said, “Until we know more about pricing, capacity and schedules, we are not in a position to quantify this impact.”
Although two of the three majot Qantas shareholders UBS Global Asset Management, Balanced Equity Management and Maple Brown Abbott have said they will not sell their shares, their position after yesterday’s statement is not known.
They own 13% of Qantas between them, with this level of shareholding not being sold to APA being able to prevent the bid going ahead.
With Qantas also saying it believed the full-year result for 2007 would be at the upper end of the 30 to 40% growth it forecast in February, the airline posted a pre-tax income of $671 million last year, further concerns have been raised that the offer price is low with hedge funds and other investors wanting to hold on to their shares to reap bigger the rewards down the track, not wanting to hand those rewards to APA on a plate now.
With heavy trading Qantas yesterday closed 8¢ higher at $5.12, remaining well below the APA share offer price.
Report by The Mole
John Alwyn-Jones
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