Australia's national carrier Qantas yesterday caved in to demands by stakeholders who have the potential to block a A$11.1 billion (US$8.6 billion) takeover bid and released a profit forecast for the next fiscal year.
Qantas said in a news release it expected pretax profits for the year ending June 30, next year, to be in line with analysts' estimates of around A$1.23 billion.
Qantas also said its full-year result for the year ending June 30 this year, would be "towards the upper end" of its earlier stated forecast. The company has not put a figure on the forecast, but has predicted it will be between 30 percent and 40 percent higher than the A$479.5 million profit reported for 2005 to last year.
The statement came after pressure intensified this week on Qantas management, which is backing the takeover bid by a private investment group Airline Partners Australia, to say more about the company's outlook.
The company's share price on Wednesday fell to its lowest level since the bid was announced in mid-December as speculation mounted that it may fail, despite winning government and regulatory approval so far.
The talk centered around two managed funds, UBS Global Asset Management and Balanced Equity Management, which between them hold more than 10 percent of Qantas shares and therefore the power to scuttle the deal, which requires 90 percent shareholder approval.
The funds reportedly had demanded an outlook for next year to better assess whether the offer of A$5.45 a share by the investment group, led by Australia's Macquarie Bank and the Texas Pacific Group, was enough.
Qantas has twice in recent months boosted its earnings forecast for the year ending in the middle of this year, but until yesterday had declined to make predictions beyond that.
Andrew Sisson, the managing director of Balanced Equity Management that owns about 4 percent of Qantas, welcomed yesterday's announcement as helpful but suggested he had wanted more detail than was provided.
"It's more helpful when we're doing our deliberations, but whether we think it's positive or negative I'm not prepared to discuss," Sisson said.
"We were looking for more information and we've got some information," Sisson said.
UBS did not immediately respond to the Qantas statement.
Qantas shares ended 1.6 percent higher at A$5.12, after jumping as high as A$5.15.
"In response to market speculation and queries received from investors, Qantas confirms its outlook expectations for 2008 are in line with average analyst consensus profit before tax estimates of approximately $1.23 billion," the Qantas statement said.
The estimate did not include the possible impact of fluctuations in fuel prices, increased competition from Virgin Blue and the expected entry to the Australian market of Singapore-linked airline Tiger Airways, and other factors, Qantas said.
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