The Australian government on Thursday ruled out allowing iconic national airline Qantas to fall into foreign hands, after it was revealed that a multi-billion dollar take-over bid had been launched.
Qantas said it had been approached by Australia's biggest investment bank, Macquarie and US-based private equity firm Texas Pacific Group in a deal potentially worth 10.9 billion dollars (8.4 billion US). "The government policy is that the majority ownership of Qantas should be Australian," Treasurer Peter Costello told reporters.
"That is the act, that's what the law says and I don't believe there are any grounds to amend the law to reduce the requirement for Australian ownership." Legislation limits total foreign ownership of Qantas to 49 percent and any individual shareholding to 25 percent.
"Let me make it also clear, apart from the act, there are various foreign investment requirements that any new investors in Qantas will have to have a look at," Costello said.
The take-over approach stirred nationalistic rumblings in Australian media Thursday and the treasurer said it was vital to keep such an important national symbol in Australian hands. "It flies the Flying Kangaroo and the Flying Kangaroo says Australia - and as far as I'm concerned that means majority Australian ownership," he said.
Australia's Allco Finance Group, which has an aircraft leasing business and rates Qantas as one of its key customers, said Thursday it was considering participating in the bid for Qantas.
Texas Pacific Group and Macquarie Bank have won financial backing from Goldman Sachs, Citigroup and Credit Suisse for their bid for Qantas, the Financial Times reported. The report, citing people familiar with the matter, added that TPG and Macquarie are "deadly serious" about the bid, with the carrier's strong cash flow seen as positive for a leveraged bid.
Sydney-based consultancy firm, the Center for Asia Pacific Aviation (CAPA), said, however, that the consortium's pursuit of Qantas was likely to face several roadblocks.
CAPA noted Qantas was a politically sensitive, iconic company, apart from the 49 percent limit on foreign shareholdings. "It is also an awkward buy-out proposition, with a broad spread of institutional shareholders and 'mum and dad' investors," the firm said. But, CAPA said, if a firm bid does materialise, Qantas could benefit from a strong, extremely well-funded backer in Texas Pacific.
Texas Pacific has a penchant for airlines, having invested in financially distressed US airlines including Continental Airlines and American West Airlines in the 1990s and more recently US Airways. CAPA said airline ownership deals were gathering pace in the Asia-Pacific region with the ownership of Chinese airlines also in the spotlight.