Thankfully it is over but Qantas can benefit from the experience, if there's the whit and mind to do something dramatic on a board which is going to be paralysed for some while yet.

The airline's business seems to be doing well regardless of the bid debacle.

Yesterday we saw the traffic figures from Qantas for March which were the best ever for the month and it is now entirely possible the airline could be facing a fourth profit upgrade and earnings of around $1 billion.

The previous forecast had pre-tax earnings around $939 million and since then there's been two very good months of business reported (February and March) and the Aussie dollar has risen, lowering costs.

Qantas said it filled 80.7 per cent of its seats in March, compared to 75.1 per cent in march 2006, with a very strong performance in the international business with passenger loads up 8.3 per cent and yields (that's the profitability of each seat) up 8.6 per cent.

And Balanced Equity, the fund manager which led the opposition to the $5.45 offer, has lifted its stake to 5.3 per cent on buying this week: putting money where its mouth was, unlike the board.

The shares fell one cent to $5.22 yesterday; so much for warnings from the chairman and Airline Partners of a bloodbath if the bid failed. It has been a stable week.

Here's some readers comments on the last week's events at the airline and the farce of the APA bid.

...............

What the Qantas Bid’s Failure Means

by Observer on 7 May 2007 at 9:09am

Whether the share price will tumble far enough to be called a ‘rout’ depends how fast the hedge funds want to exit. Also depends whether an army of punters congregate to 'short' the Qantas shares with CFDs, to add to the selling pressure. Should be interesting to watch. What was it that Margaret Jackson (Chairperson) said about the share price if the shareholders do not accept the bid? Was it a big fall?

by Bigbadbob on 7 May 2007 at 1:14pm

Management were offered huge inducements to support the offer..Many would question how this can be legal?? However they now need to be given the boot.

Qantas Bid Dead

by Longinthetooth on 7 May 2007 at 10:52am

There's a lesson here for other ASX companies, regarding Boards throwing in the towel, saying it’s too hard to continue growing the business lets sell the share holders ownership.

Shareholders choose to own shares for many reasons, not least as it gives them a liquid asset, that they can manage themselves. Suddenly finding that the Board has recommended cashing them in, or replacing them other shares, takes that decision making away from many shareholders.

Alinta, which is trying to also do this, and Coles seems set on that path, need to learn.

In Coles case they seem to also support cashing the lot in. In such circumstances the Wesfarmers offer looks a more attractive option.

This cashing approach can create havoc trying to manage a retail size portfolio. I can't see it giving retail customers any confidence in holding ASX blue chips!

How To Fix UP Qantas

by Vampirekiller on 8 May 2007 at 9:43am

Congratulations, I could not have put it better myself. The Government should now drive a stake through the heart of the APA vampire and declare it incontrovertibly dead. Otherwise the rest of the national - and international - business community will continue to fall about laughing at this amateurishly managed, monumentally botched bid. The Government might also point out to the Board and senior executive of Qantas that they are there to represent the shareholders. Not themselves. If they had any ethics and decency most of them should resign. Now.

by Stewart on 8 May 2007 at 10:14am

I couldn’t be happier this has fallen over. It’s about time the government thought about making decisions based on its own citizens instead of foreigners dressed up as Australians. APA lied to both the Australian people and the Federal Government throughout the bidding process and their arrogance and greediness has bought them undone. Bob baby, 46% ain't 50% and a deadline's a deadline. The board has acted appallingly by promoting this opportunistic bid. Unfortunately having spent so much time and money on this bid, I doubt the snakes will give up and wriggle away.

by Doug on 8 May 2007 at 11:25am

The 3 Amigos in this greed driven debacle should be out on the streets -- without the Golden Parachute so beloved of incompetent management. They have not acted in the interests of the owners and should resign without trying to enforce any payout by shareholders. Their actions have been unconscionable.

by tcam on 8 May 2007 at 11:30am

I couldn’t agree more, so much for the greedy millionaire club, but what's more important to me and I think a lot of Australians, is let's back keeping Australian assets in Australian hands not sold of to some overseas interest with a pocket full of money who will most likely strip it of it's worth or downgrade it's quality and service.

EG. ARNOTTS

by Bigbadbob on 8 May 2007 at 12:24pm

I just hope enough shareholders have the guts/nouse to kick the Board/CEO out the door pronto..they were surely compromised with the big cash incentives they were offered by the consortium..there should be laws to prevent these incentives being offered

by Ken Higgs on 8 May 2007 at 4:26pm

If nothing else, this farcical affair betrays the corrupt values or total lack of values prevailing in corporate Australia today. The MESS-age of Australian and multinational corporations is "greed is good" and "do unto others before they do unto you." Would that we had a moral government to update our corporation and securities laws to prevent management and boards ripping off shareholders and workers, but all we have is the ignorant sorcerer’s (Malcolm Fraser) apprentice.

by dhukka on 8 May 2007 at 7:23pm

The real joke are the analysts who have been urging their clients not to sell as they think this poorly returning, highly geared highly capital intensive business is worth more than the bid price. Never look a gift horse in the mouth.

by Di on 8 May 2007 at 9:06pm

This review is excellent - have already shown it to a few people and we all reckon you've covered all the points well. This golden pay off to the CEO & board members is nothing more than a bribe and I'm looking forward to seeing how our regulators handle this. Does it only take 100 shareholders to request an extraordinary meeting?

(ED: yes it does.)

Copyright Australasian Investment Review.
AIR publishes a weekly magazine. Subscriptions are free at www.aireview.com.au