Qantas appoints Macquarie to defend against PE bids

Qantas has emerged as a target for private equity as its stock plunged 32% last week in response to predictions of an annual net loss. The company is trading down 26% year-to-date versus a 0.4% gain in the S&P/ASX200 Index.

On June 5, Qantas said that losses on its international routes are likely to reach A$450 million ($445 million) for 2011-2012, extending a deficit of A$216 million posted the previous year. It blamed structural issues in the business and global economic issues, such as increased fuel cost, a strong Australian dollar and weakness in the UK and European markets. There was also a one-off A$100 million cost of industrial action.

The company's domestic business, however, is expected to stay in the black, with the Qantas and Jetstar brands delivering pre-tax profits of more than A$600 million.

This is not the first time Qantas has been subject to speculation about private equity bids. Last summer, The Australian reported that responses to a potential takeover had been discussed at senior levels of government, with both the transport minister and treasurer inclined to oppose any PE bid. It was suggested that a A$3.5 billion bid was being considered by some parties. Qantas' current market capitalization is A$2.4 billion.

Airline Partners Australia (APA), a consortium led by the now defunct Allco Finance Group and including Macquarie Bank, TPG Capital and Onex, offered A$11 billion for Qantas in December 2006, but failed to win shareholder approval.

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• Topics
• Australasia
• Buyouts
• Restructuring
• Industrials
• Logistics
• Australia
• Consumer
• buyout
• Macquarie Group
• Distress