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Qantas's glittering run came to an end yesterday with the shares suffering their first fall in the seven days of trading since APA pulled its offer once and for all and the airline's board lost chairman, Margaret Jackson and director, James Packer.

At last some straight talking from Qantas management, shorn of most of the hyperbole of the past three years about threats and dangers to the company’s future.

Gone were the chicken little ‘the sky is falling’ alarms about costs, oil prices, foreign airlines, terrorism, SARS and you name it.

In their place we have what appears to have been the basis of a fairly rational, level-headed assessment of where the airline stood after the APA bid debacle and the now derisory $5.45 a share offer.

Instead of meeting the predictions of a rattled chairman in Margaret Jackson, who as late as this week was wondering when the share price would fall, the shares hit record levels.

After withstanding the sale of hundreds of millions of shares by hedge funds and other speculators (more than 750 million in almost three weeks), the QAN share price broke free this week, rising gently and then accelerating yesterday to its highest level ever on the back of the briefing by the airline’s management to major shareholders.

The shares jumped past the $5.45 of the APA offer to climb to $5.54 and close at $5.46, up 4 on 114 million shares.

That’s $5.54 price is actually higher than the first offer price of $5.60 from APA which was made before the final 15c a share dividend was struck.

APA took that dividend away (which could have cost them the bid) and cut the price to $5.45. The effective price yesterday based on yesterday’s close was $5.69.

That’s a firm rejection of the APA offer and the board and management’s active support of it.

It confirmed the opposition to the bid from the likes of Balanced Equity Management and the now departed head of UBS Asset Management. Their investors in Qantas are all a little richer now for the opposition, as is the Qantas management group, although not as rich as the pot of gold promised to them by the APA offer.

Yesterday’s briefing backed up the comments from CEO, Geoff Dixon this week to staff about the airline being in a ‘sweet spot’.

A 17 page presentation formed the basis of the ‘making up’ briefing with big shareholders in Sydney, many of whom had sold early and were now buying back in, forced to by the bid failure and their slow realisation that the airline’s share price was going to rise.

It was a rare burst of unvarnished commentary from the CEO which clearly confirmed the healthy state Qantas now finds itself in, and how close it came to being ‘stolen’ by the APA offer of $5.45 a share.

Think of the briefing yesterday in another way: think of it as the first major update from management for the members of the new APA dominated board, had that New York hedge fund not botched its acceptance of the offer.

That management group included CEO Dixon, his number two the airline’s Chief Financial Officer, Peter Gregg and other senior managers.

Think of Mr Dixon using the same briefing notes and presentation, as released yesterday, to tell APA just what a bargain they managed to snare and how much comfort the news would be to the banks which financed it.

In fact shareholders would be entitled to ask why wasn’t this document, or something like it, included in the Target statement in the APA bid?

As you will see below for instance the presentation reveals a review of the Frequent Flyer program has been going on since last year. That wasn’t highlighted in the statement and now it seems to be a big part of the revamp.

Of course minority shareholders who had held out against the offer, would not have been involved or probably informed of the detail in this update, had APA won.

Yesterday Dixon used the word “favourable,” rather than the phrase, ‘sweet spot’ to describe where the airline finds itself at the moment and into the immediate future.

“We think we can handle most of what’s coming at us,” he was quoted as telling analysts and investors in Sydney yesterday.

He said the airline is benefiting from rising ticket sales and a “strong” domestic and global economy and “these favourable conditions should last for the next 12 to 18 months”.

Analysts at UBS, Macquarie Bank, JP Morgan, Goldman Sachs JBWere and other leading firms have this week upgraded their ratings on Qantas shares to “buy” from “hold,” or are about to release new recommendations, probably later today after they assess yesterday’s briefing.

There was no mention of a new profit upgrade yesterday. Qantas has already increased its earnings forecast twice after the board endorsed the buyout, saying pre-tax profit may almost double to $1.23 billion in 2008, from $671 million earned in 2006.

Analysts said Dixon told the meeting Qantas didn’t see the need to upgrade its forecast for the current financial year to June.

Among the points made in the briefing were:

The Qantas board will consider returning capital to shareholders through a special dividend payment, a share buy-back or splitting the company (demerger was used in the graphic).

Analysts said there was no elaboration of what was probably the most important part of the meeting: more details of possible options after that long board meeting last Thursday which saw Ms Jackson announce her departure and that of Mr James Packer as a director. These will happen at the annual meeting in November. The briefing again emphasised that the APA plans for Qantas would be followed.

APA had planned to increase Qantas’ debt to return $4 billion to shareholders within a year of taking control; Mr Dixon was reported as using a figure of $3.5 billion earlier this week and Merrill Lynch says it could be $2.2 billion.

Demerger could mean splitting off the freight business, Jetstar or selling the frequent flyer program, all of which were mentioned in the briefing presentation notes.

Qantas said it was “reviewing” the ownership of the 4.9 member loyalty program.

That could actually be revamped and returned

It hasn’t taken long but the Qantas board and management are up to their old tricks again, telling people other than the shareholders things about the airline when they should be trying to be as transparent as possible.