Another low blow for the flying kangaroo

Yesterday saw Qantas, Australia’s national airline, announce its financial results and it wasn’t pretty. The company recorded a statutory after tax loss of A$2.8bn for the year ended 30th June 2014, leaving it reeling from yet more body blows in terms of investor confidence and attracting the attention of the financial media around the world.

Qantas has had a truly torrid time over the last few years, what with increased low-cost domestic competition, a spat with the Australian government about the restrictive levels of foreign ownership, enforced job losses and resultant strikes, so yesterday’s announcement really wasn’t going to surprise anyone. 

In its formal results statement, the company talks about “driving an earnings recovery and deleveraging the group’s balance sheet to shape a profitable future and build long-term shareholder value” and references that it has finished its strategic review which commenced in late 2013 and has “identified, valued and will continue to assess opportunities to sell non-core assets such as airport terminals, property and land holdings”, the proceeds of which the company clearly cites will be used to repay debt. 

With a clear message regarding the sale of assets and the news that the Aussie law makers have agreed to relax the laws that prevented a foreign owner from holding more than 25% of the company, we could well see the opening bell being rung in terms of some rounds of M&A activity involving the company.

Filed under: Australia, government, M&A, airline