Qantas confirmed yesterday that British Airways plans to sell its 18.25 percent stake in Australia's flag-carrier over the next two days.
The stake, which British Airways has held for 11 years, is expected to sell for A$1.12 billion(US$775 million).
Qantas requested a trading halt yesterday to continue until the opening bell tomorrow, saying this would allow the market to absorb the information in an orderly fashion.
"British Airways has been a supportive shareholder over a period of some 10 years and both airlines have formed a strong and constructive commercial relationship," said Qantas chief executive Geoff Dixon.
"Neither airline now believes the shareholding is necessary for the ongoing conduct of that relationship,'' Dixon said.
He added, "To this extent the Joint Services Agreement that provides for joint schedules, sales and operations between Australia, Southeast Asia, the United Kingdom and Europe will continue, as will other forms of cooperation."
Just last month, Australia's competition regulator approved the "kangaroo route" pricing and marketing alliance between Qantas and British Airways.
British Airways decision to sell its stake in Qantas won't have an impact on the joint services agreement, Dixon said.
A day before Qantas reported a record annual profit on Aug. 19, of A$648.8 million speculation resurfaced that British Airways wanted to sell its stake in Qantas. But Dixon sidestepped questions at the briefing, noting industry consolidation was inevitable.
"The tyranny of distance between Australia and the UK rules out such consolidations, but not cooperation between Qantas and British Airways," Dixon said. "We will, however, seek to further strengthen our commercial position to enable us to take a leading role in any suitable consolidation opportunities that may arise in the Asia Pacific region."
There was speculation in Australia that the British Airways sell-off could interest Singapore Airlines, which has long looked for a steady foothold in the Australian market. But analysts suggested most of the stake would be snapped up by institutional investors. Singapore Airlines declined immediate comment.
Ian Thomas, a senior consultant with the independent think tank the Center for Asia Pacific Aviation, said Qantas would likely prefer to see more benign foreign shareholders rather than another airline.
Other possible suitors include one of the three major Chinese airlines or the recently merged KLM/Air France.
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