The APA Qantas deal will not be over until the fat lady sings………..

In ongoing media reports and speculation this morning, it is clear that even though the Government has “approved” the deal between APA and Qantas, the sale of Qantas to APA is not a done deal, with objectors pilots accusing the Federal Government of failing to properly scrutinise the sale agreement of the airline.

While Federal Treasurer Peter Costello has approved the $11 billion takeover of Qantas on the basis that the Government will impose strict conditions aimed at keeping the airline Australian owned and operated, Michael Pascoe, author of the Eureka Report and acknowledged financial analyst said this morning on Channel 7’s Sunrise that there was nothing new in the agreement and not surprisingly it was soft on detail with no real guarantees, with Mr Pascoe also making it clear that none of these conditions applied to Jetstar, potentially leaving the door wide open for Qantas to do what it wants through Jetstar.

With Mr Costello’s approval of the sale because Qantas has given an enforceable undertaking that it will not be majority foreign-owned and will remain based in Australia intended to satisfy shareholders to agree to sell their share, UBS and Balanced Management Funds are still rejecting the offer price and it only needs a few more investors or as Mr Pascoe said a few to just not return the form and the deal is dead.

The deed of undertaking states that Qantas must continue its record of jobs growth “in line with market conditions”, but Pilots Association spokesman Peter Summerville says the Government has not done enough to protect Australia’s national interests, adding on ABC, “Our concerns are that there are still many uncertainties in regard to this deal and the Government has done more to shepherd it through, to line-up with big business, than give it the scrutiny the Australian public and the 38,000 employees of Qantas deserve”.

The National Secretary of the Australian Manufacturing Workers Union (AMWU), Doug Cameron, the union representing airline maintenance workers, also on ABC said that the conditions attached to the takeover do nothing to guarantee local jobs, adding, “There should have been a clear and unequivocal undertaking from the private equity consortium that the airline fleet that is being purchased will be maintained in Australia,” adding, “The wording in the document does not do that and I think the future of Australian airline maintenance could be under severe pressure because of this deal between big business and the Howard Government.”

In the meantime, a number of Coalition backbenchers concerned about the proposed Qantas takeover have welcomed the conditions attached by the Federal Government allowing the bid to go ahead, but some, including Nationals Senator Barnaby Joyce, still has reservations while Liberal MP Bruce Baird says he is satisfied all his concerns have been met, adding, “The issues that I’ve raised publicly related to the offshoring of maintenance, to jobs generally, regional services and frequent flyer programs and they’ve addressed each of those issues”.  I think it’s been a conscientious approach to the concerns that have been raised in a situation, which is better than currently exists.”

Whether that is enough or whether Jetstar offers a back door to Qantas has not been addressed by Mr Baird.

The undertaking is rather soft on the question of regional services and no further ahead than currently offered by Qantas in that services will only be maintained while commercially viable and as Michael Pascoe said, what can you expect.

Outback Queensland Winton Mayor, Bruce Collins said on the ABC that he is worried about the future of air services to remote Australia, saying Qantas was founded in the town in the 1920s and he is concerned the new owners might focus more on profitable routes than those in rural regions, adding, “I would hope that they would show a commitment to their history and don’t forget where they were founded”.  “They were founded as a result of a need. I would really urge the new owners to give a commitment to serve outback Queensland and outback Australia.”  “It raises some concerns in my mind about the returns their new owners will be looking for.“  “There are people who live out in these parts, all of these people need to be serviced.” “We don’t want to see the big companies pull out of these areas and concentrate on the big money places.”

The Northern Territory Government also says it will confirm with Qantas CEO Geoff Dixon that flights into the region will not be compromised because of the company’s takeover, with NT Tourism Minister Paul Henderson saying he has been previously assured Territory services would not be withdrawn, adding, “It’s vital that we maintain the Qantas presence in the Northern Territory and when I last spoke to Geoff Dixon he did say that there was no intention to withdraw services from the Northern Territory.”

“I’ll be ringing him again and seeking confirmation once again that that won’t be the case.”

ABC says that analysts are predicting a jump in Qantas stocks when the Australian share market opens, with Qantas shares up one cent to $5.21 after the market closed yesterday and Commsec senior analyst Cassandra Meagher saying that the Qantas share price could jump by as much as 24 cents today, adding, “It’s more likely to go up than down.”   She added, “The news from the Treasury is good news and it is a positive sign for the deal, but that doesn’t mean that it is a sure thing that it will go through, however it is positive news and the share price should trade up.”  “We expect the Qantas share price will trade between $5.21 and $5.45.  “$5.45 is the upper price because on the 19th of February the special dividend of 15 cents was taken out of the $5.60 APA offer price. So we expect to trade up to that $5.45 level.”

As Michael Pascoe said, echoing The Mole’s comments last week, the Flight Centre deal collapsed because shareholders would not go for it and that could happen with Qantas.

There is a lot of emotion tied into Qantas……………………….now where is that fat lady……….and what is she singing???

Report by The Mole