Texas Pacific says Qantas open to asset sale
A report in the Age this morning says that the largest foreign investor in the consortium bidding for Qantas has conceded it is open to the idea of spinning off some of the airline’s non-flying assets, despite Airline Partners Australia’s repeated assurances it has no plans to “break up” the national carrier.
Amid speculation the consortium might sell Qantas’ frequent flyer scheme, terminal leases, holiday business and freight arm to help fund the deal, Texas Pacific Group partner Rick Schifter, Texas Pacific’s key aviation deal maker since the private equity firm made its name turning around Continental Airlines in the early 1990’s, said it was feasible Qantas could spin off some of its businesses to “unlock value”, adding, “I think Qantas management have said previously before our involvement that they are evaluating strategies like that.”
While he declined to specify the Qantas businesses that could be spun off, he said the airline could still retain majority ownership and control of the assets, citing, Air Canada’s spin off of its frequent flyer scheme in 2005, in which the airline still has a 30% stake. Worth $C3.9 billion ($A4.2 billion) on the Canadian sharemarket, the scheme has double the value of the recently relisted Air Canada.
Mr Schifter added, “The fact of the matter is the airline industry, given its volatility and capital intensity, trades at lower multiples than businesses where you can have greater predictability of cash flow and less capital intensity — like a frequent flyer program,”
JPMorgan analyst Matt Crowe has estimated the consortium could fetch $3 billion selling Qantas’ non-core businesses, including up to $1.2 billion for its frequent flyer scheme, but Mr Schifter said Texas Pacific’s planned investment in the Qantas buy-out was not based on spinning off operations but more the airline’s growth plans, adding, “it was more of a back of an envelope nature than really undergoing the analysis we would need to do than predicate a business decision on that”.
Regarding speculation that Texas Pacific’s ultimate goal is to merge Qantas with another Asia-Pacific carrier, possibly Singapore Airlines, Mr Schifter said: “While I think there’s an opportunity for consolidation in the Asia Pacific, the obstacle that needs to be addressed are foreign ownership restrictions that exist in all the countries, which in my view are not going to change in the course of our investment horizon.”, adding “It doesn’t mean that you cannot have closer co-operation or cross-ownership and get some of the benefits of consolidation.”
Mr Schifter said Texas Pacific did not expect its proposed Qantas investment to make the same stellar returns as its previous investments, saying, “Because this is not a turn-around situation, we do not have the potential to achieve the same reward that we have achieved in some of our other airline investments”.
“We’re going into this with the understanding that that’s the case but also that the risk is much lower than what we’ve seen in other situations.”
Report by The Mole
John Alwyn-Jones
Vegas’s Billion-Dollar Secrets – What They Don’t Want Tourists to Know
Visit Florida’s New CEO Bryan Griffin Shares His Vision for State Tourism with Graham
Chicago’s Tourism Renaissance: Graham Interviews Kristin Reynolds of Choose Chicago
Graham Talks with Cassandra McCauley of MMGY NextFactor About the Latest Industry Research
Destination International’s Andreas Weissenborn: Research, Advocacy, and Destination Impact
Graham and Don Welsh Discuss the Success of Destinations International’s Annual Conference
Graham and CEO Andre Kiwitz on Ventura Travel’s UK Move and Recruitment for the Role
Brett Laiken and Graham Discuss Florida’s Tourism Momentum and Global Appeal
Graham and Elliot Ferguson on Positioning DC as a Cultural and Inclusive Global Destination
Graham Talks to Fraser Last About His England-to-Ireland Trek for Mental Health Awareness
Kathy Nelson Tells Graham About the Honour of Hosting the World Cup and Kansas City’s Future
Graham McKenzie on Sir Richie Richardson’s Dual Passion for Golf and His Homeland, Antigua
ADS PRO 
TAP Air Portugal to operate 29 flights due to strike on December 11
Qatar Airways offers flexible payment options for European travellers
Airlines suspend Madagascar services following unrest and army revolt
Air Mauritius reduces frequencies to Europe and Asia for the holiday season
Major rail disruptions around and in Berlin until early 2026