No wonder Qantas shares tumbled 8c yesterday to $5.16 on more than 70 million shares.
This in a market which rose one per cent.
Investors are getting anxious that the $11.1 billion takeover offer will be frustrated by a small group of institutional shareholders.
The high stakes stand-off is between the bidding vehicle, Airline Partners Australia, and a small group of institutions led by UBS Asset Management and Balanced Equity who between them own around 9.5 per cent of Qantas’ issued capital.
It could get ugly and it could get very costly for shareholders large and small.
Traffic figures released during the day for the month of January and the first seven months of the 2006-07 year show that the airline is still doing very well, which will bolster the argument of UBS and its supporters.
Qantas said that the number of passengers carried on group services was 6.2 per cent higher in January than in January 2006.
In a statement, the company said revenue per kilometre increased 7.2 per cent while the revenue seat factor was 83.7 per cent or 3.3 percentage points higher.
Qantas also said had increased it fuel hedging for the 2007-08 year, with 50 per cent of anticipated crude oil requirements now hedged at a worst case rate of $US69.64 a barrel.
Shareholders have until April 3 to accept the APA offer, although that can be extended.
Hedge funds and other punters are getting increasingly nervous that $5.60 a share ($5.45 a share after a 15c special dividend) could fall over, as yesterday’s big volume of more than 70 million shares, shows.
In its statement yesterday the airline said:
“January Group (comprising Qantas Domestic, Qantas, Jetstar and Qantas International) passenger numbers increased by 6.2 per cent over the previous year. RPKs (Revenue Passenger Kilometres) increased by 7.2 per cent, while ASKs (Available Seat Kilometres, or capacity) were up 3.0 per cent, resulting in a revenue seat factor of 83.7 per cent, which was 3.3 percentage points higher than the previous year.
“Total Domestic (Qantas, QantasLink and Jetstar domestic operations) yield excluding exchange for the financial year to January 2007 increased by 4.0 per cent when compared to the same period last year. Total International (Qantas, Australian Airlines and Jetstar international operations) yield excluding exchange increased by 8.5 per cent over the same period.
“Group passenger numbers for the financial year to January 2007 increased by 7.2 per cent from the previous year. RPKs increased by 7.3 per cent, while ASKs increased by 3.6 per cent, resulting in a revenue seat factor of 80.8 per cent, 2.8 percentage points higher than the previous year.”
That means the airline is carrying more passengers and generating more revenues: it’s the Jetstar influence in part and the boom in Qantas’ international business.
That revenue rose faster than passenger numbers is a very good sign for the airline. Might another profit upgrade be in the offing?
The last separate set of figures Qantas released on traffic and capacity was for the five months to November.
They showed that:
November Group (comprising Qantas Domestic, QantasLink, Jetstar and Qantas International) passenger numbers increased by 9.2 per cent over the previous year. RPKs increased by 7.7 per cent, while ASKs were up 3.4 per cent, resulting in a revenue seat factor of 80.3 per cent, which was 3.2 percentage points higher than the previous year.
Total Domestic (Qantas, QantasLink and Jetstar domestic operations) yield excluding exchange for the financial year to November 2006 increased by 2.3 per cent when compared to the same period last year.
Total International (Qantas, Australian Airlines and Jetstar Trans-Tasman operations) yield excluding exchange increased by 8.2 per cent over the same period.
Group passenger numbers for the financial year to November 2006 increased by 7.4 per cent from the previous year. RPKs increased by 7.0 per cent, while ASKs increased by 3.7 per cent, resulting in a revenue seat factor of 79.8 per cent, 2.4 percentage points higher than the previous year.
If you look carefully, all measures show that Qantas’ operations are still solid and doing well.
Growth rates have slowed but the comparison back in November with November 2005 was with a depressed first half of 2005-06.
Conditions have certainly improvedand the point of these figures is that they buttress the argument from UBS and other shareholders that the airline is doing better than the bid from APA suggests.
Jetstar is doing well but so are Qantas’ international operations which have boosted revenues and passenger numbers.
Qantas said in February when announcing its 2007 interim profits that: “Qantas today announced a profit before tax (PBT) of $523 million for the half-year ended 31 December 2006, an 8.3 per cent increase on the prior comparative half-year to 31 December 2005. Net profit after tax increased only 1.7 per cent to $359 million as a result of a favourable tax charge in the prior corresponding half.”
In the 2006 financial year Qantas earned $480 million after tax, and in December forecast that its earnings for 2007 would improve by 25 per cent to 30 per cent.
It then upgraded that forecast at the interim profit statement in early February to an increase in the range of 30 per cent to 40 per cent, or $624 million to $670 million after tax, or more than $900 million pre tax.
Driving this was the drop in oil prices.
Qantas said yesterday that it had hedged all of its 2007 (June 30 year) fuel requirements and had now hedged half its 2007-08 fuel requirements at prices which appear to be advantageous to the airline.
Meanwhile the senate inquiry into the takeover (specifically the Jetstar part of the transaction) will be held today in Canberra.
The Senate’s standing committee on
