Qantas Appoints Macquarie After Shares Dive

June 12, 2012

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Qantas Airways has tapped Macquarie Group to defend the Australian airline against a possible takeover and find ways to shore up its share price, a source with knowledge of the matter said, after the carrier lost a third of its value last week because of a profit warning.

The airline recently split its international and domestic businesses so that a new management team could focus on turning around the unprofitable global arm while the domestic unit battles an aggressive expansion by Virgin Australia.

Analysts said at the time they did not think the split was designed to clear the way for a takeover of the international division.

Qantas shares rose 8 percent on Tuesday after the Australian Financial Review first reported that Macquarie had been appointed. Chief executive Alan Joyce has also appointed Citigroup to monitor the airline's share register for any raiders, the newspaper said, without identifying any sources.

Qantas and Macquarie declined to comment on whether Macquarie and Citi have been appointed.

The newspaper said senior executives were not aware of anyone lining up a bid, but Joyce has reactivated an internal defence team, first set up last year when there was talk that former Qantas chief Geoff Dixon, who left the carrier in 2008, was working with a consortium to buy a big stake in the airline.

Qantas shares hit a record low of AUD$0.96 (USD$0.95) last week after the company warned it expected to book its first net loss since it was privatised in 1995, blaming deep losses in its international operations, weak travel demand and high fuel costs.

Its battered shares rose 8.3 percent to AUD$1.05 after the newspaper report, even though CEO Joyce said last week that he was not aware of any bid being lined up for the company.

Macquarie will be looking to identify any businesses that the airline could jettison to help boost its share price, the source said, declining to be identified.

Ironically, Macquarie led an AUD$11 billion bid with private equity firms for Qantas in 2006. The bid was ultimately scrapped as two key fund managers refused to back the AUD$5.45 a share offer despite Qantas management pushing for the takeover.

The Airline Partners Australia group included private equity giant Texas Pacific Group and Canadian investment firm Onex.