Qantas is becoming a bit of a headache for the intending acquirers and the Federal Government.
It has the potential to be a sort of ‘tar baby’ which attaches itself to the Government and the members of the Airline Partners Australia consortium, which included Macquarie Bank, the Allco Equity and Allco Finance group, Texas Pacific and other foreigners.
Take yesterday: APA may have though its decision to make a voluntary reference to the Foreign investment review Board (FIRB) might have helped put the issue to bed but no way.
A seemingly accommodating Federal Treasurer, Peter Costello, had a doorstop for the media and kept the issue running.
He told the media that Qantas will remain an Australian company and the government will enforce the law to ensure it doesn’t become foreign owned.
Mr Costello said the consortium was sending the papers to the FIRB, which would consider if the sale fell outside the national interest.
“The scrutiny will be very vigorous,” Mr Costello said in the doorstop interview.
He vowed that government would enforce the Qantas sale act, which prevented the carrier being majority foreign owned.
“The government will not allow Qantas to go into majority foreign ownership,” Mr Costello said.
“There cannot be majority foreign ownership of Qantas and it will not be. “The law will be enforced.”
Foreign ownership of Qantas is restricted to a maximum 49 per cent.
“The government will not allow foreign ownership to go above that, (49 per cent) nor will the government allow Qantas to go into foreign control,” Mr Costello said.
It would ensure Qantas that remained in Australia and was Australian controlled, Mr Costello said.
Mr Costello said Qantas would also need to continue serving important domestic and regional routes.
“The government will require that Qantas have majority Australian ownership, that it be under Australian control, that it be located in Australia and that the airline continue to serve important domestic and regional routes,” he said.
“The matters that are the subject of the bid will be put fairly and squarely to the board.
“The scrutiny will be careful and rigorous and after all the facts are known the outcome will be announced.”
Mr Costello said he could provide no assurance on jobs at Qantas, but would be seeking answers from the company’s board and management.
“The fact that this application comes along doesn’t change the fact that the board and the management are responsible for jobs,” he said.
“We’ll be very interested to hear what they say, but if you want to know about jobs in Qantas you’d have to ask the management – that’s what we’ll be doing.
“I don’t run the company.”
The takeover could be rejected by the FIRB on various conditions, the treasurer said, but he would not prejudge the outcome.
The FIRB could disallow the proposal if it was contrary to the national interest.
“You don’t have to find something is in the national interest, you have to apply your mind to whether something is contrary to the national interest,” Mr Costello said.
All good stuff and as I pointed out yesterday the Qantas deal has becomean issue in the continuing leadership tensions between the Treasurer and the Prime Minister, who was more interested in talking about climate change and water yesterday.
Today sees Federal parliament convening for the first time in 2007, don’t expect the Qantas issue to die down.
There is growing concern among coalition backbenchers about what the sale could mean for jobs and the status of the national carrier. Much of this is irrational and probably more to do with the travel experiences of the MPs and the level of service in their electorates than any national issue.
Take the reaction of APA director, Bob Mansfield to the issue of guaranteeing jobs at the airline (an absurd situation and one not even the current management would agree with).
Mr Mansfield said while the consortium was willing to consider some conditions, including a commitment to regional services, jobs could not be guaranteed.
“On staffing, what we’re putting on that is we can’t guarantee jobs, because I don’t think any employer can,” Mr Mansfield told Southern Cross Radio yesterday.
“Our single focus on this whole exercise … is to grow the organization.
“If that happens, jobs will grow.”
Mr Mansfield indicated Qantas could sell “non-airline core businesses”, but insisted it would maintain its current levels of maintenance work in Australia.
A poll sponsored by the ACTU showed almost 80 per cent of 400 voters in eight marginal coalition-held seats are opposed to the sale, highlighted the need for strict conditions.
But that sort of poll is misleading and could be asked about a wide range of companies, say Coles, Woolies or Telstra.
The most interesting news yesterday was the strong suggestion in several media outlets that Qantas could bring forward its interim results to this Thursday or Friday from next week, as well as other documentation on the bid, including its Target statement.
Don’t be surprised if Qantas is on track for a near rescord result.
Qantas shares finished a touch easier yesterday on the ASX at $5.37.
