MELBOURNE/CANBERRA Plans by Australia's government to scrap some foreign-ownership rules for Qantas Airways Ltd (QAN.AX) will give the carrier more clout to raise capital and play a bigger role in the consolidation of a global industry that has bled cash and jobs in a vicious downturn.
Qantas has been a takeover target in recent years, courted unsuccessfully by private equity in 2007 and by British Airways BAY.L last year, but analysts said relaxing ownership controls could be too late for would-be suitors.
"Qantas is more likely to be the aggressor than a target airline," said Ian Thomas, senior consultant at aviation advisory firm CAPA Consulting, noting Qantas was now in a much stronger position compared with international rivals.
The government said it would remove a 25 percent restriction on individual foreign investors in Qantas, and drop a 35 percent cap for total foreign airline holdings, but keep an overall cap of 49 percent foreign ownership.
"This will increase Qantas' ability to compete for capital and to take opportunities to form strategic partnerships in an increasingly globalised industry," Transport Minister Anthony Albanese said in unveiling a new aviation policy.
Qantas shares closed little changed at A$2.68 (1.48 pounds) on Wednesday, reflecting the market's view that there were few foreign airlines with the appetite or balance sheet to buy a major stake in an airline now worth more than $5.4 billion (3.3 billion pounds).
QANTAS STILL SEEN AS STRATEGIC
Qantas is one of few Australian firms subject to foreign control limits. In a country as vast and distant as Australia, the carrier is still seen as a strategic national asset.
Qantas is keen to explore partners, especially in Asia, as airlines consolidate in response to global recession, falling demand and mounting losses.
Under the new policy, the government will also allow 100 percent foreign ownership of domestic airlines and offer foreign airlines unlimited access to secondary airports, including those in tropical tourist spots Cairns, Broome and Darwin.
A year ago, Qantas and BA called off talks for a $6.4 billion merger that analysts said could have helped transform an industry in the grip of a global downturn and volatile fuel prices. Qantas and BA could not agree on valuation, but ownership restrictions also presented hurdles to a successful deal.
Qantas CEO Alan Joyce said the new rules were positive steps for the airline.
"This change will increase Qantas' flexibility as it meets the challenges of an uncertain global economy and business environment, opening up opportunities for strategic growth and alliances," he said in a statement.
"It gives Qantas parity with Australian carriers governed by the Air Navigation Act when it comes to attracting capital."
Analysts said Qantas was more likely to pursue commercial partnerships than equity deals to get the savings and benefits it might be looking for. It is already part of the oneworld global alliance, along with 10 other airlines including BA, American Airlines AMR.N and Cathay Pacific (0293.HK).
Qantas is already around 40 percent owned by foreign investment funds, so raising the foreign ownership cap to 49 percent will make little difference.
"The only way it really can work is if Qantas were to issue a heap of new equity to a foreign party and push foreign ownership to the cap," said Ian Myles, an analyst at Macquarie Equities.
Albanese said Australia would look to expand liberalised air service agreements to boost international air traffic rights to and from the country.
Australia finalised an open skies agreement with the United States in 2008, and is in negotiations with the European Union.