Qantas flies higher after BA exits
SYDNEY, Australia (CNN) -- Qantas shares are 1.5 percent higher Thursday after the Australian flag carrier confirmed the Aust. $1.1 billion ($770 million) exit of British Airways from its share register.
BA said Wednesday it was selling the strategic stake it has held since 1993 so it could look closer to home for alliances and acquisitions.
BA's exit similarly frees Qantas to pursue opportunities in Asia. It already has 49 percent of a new discount carrier, Jetstar Asia, due to start flying from Singapore late this year.
Qantas said Thursday morning it had been advised that British Airways had completed the bookbuild process for the sale of its 18.25 percent shareholding.
"We understand the bookbuild was cleared at A$3.28 per share and that the shares are to be widely distributed to Australian and international investors," it said.
Qantas shares are up 1.5 percent to A$3.38 in afternoon trade, after the trading halt granted Wednesday was lifted.
British Airways -- which is headed by Rod Eddington, a former chief of Qantas's now defunct rival Ansett Airlines -- bought a 25 percent stake in 1993, two years before Qantas floated. A rights issue in 2002 subsequently diluted the stake to 18.25 percent.
In a statement Wednesday, Qantas chief executive officer Geoff Dixon said the sell-off would have no effect on the commercial operations of Qantas.
He said BA had been a "supportive shareholder" and both airlines had formed a strong and constructive commercial relationship.
"Neither airline now believes the shareholding is necessary for the ongoing conduct of that relationship," Dixon said.
British Airways will use the money raised from the sale to strengthen its balance sheet and possibly look for other stakes or acquisitions in Europe. A closer relationship with Spain's Iberia Lineas is regarded as likely.
Dixon said Qantas believed that the airline industry globally was heading towards more consolidation.
Qantas would be looking for suitable consolidation opportunities that might arise in the Asia Pacific region, Dixon said.
The Australian airline has a government-imposed 49 per cent restriction on foreign ownership of its stock but has been lobbying Canberra to have this lifted.
Qantas is Australia's largest airline and has about 67 percent of the Australian domestic market. Its domestic rival is Virgin Blue, started four years ago by entrepreneur Richard Branson. Qantas launched Jetstar as a discount competitor to Virgin Blue earlier this year, and also has an international leisure carrier, Australian Airlines.
Qantas competes on international routes with Asian carriers such as Singapore Airlines, Thai International, Malaysian Airlines, Japan Airlines, Cathay Pacific and Air New Zealand, and Middle East airlines such as Emirates.
