The Qantas ball and chain
Tony Abbott says the Qantas sale act is a ‘ball and chain’ around the airline, but the opposition says Qantas must remain majority Australian owned.
PT2M32S http://www.smh.com.au/action/externalEmbeddedPlayer?id=d-33hf9 620 349 February 26, 2014 – 2:02PM
Australia’s largest regional airline has launched a scathing attack on Qantas’s attempts to have the Abbott government guarantee its debt.
Give us the same guarantees, and other operators the same guarantees that you give to Qantas
Regional Express deputy chairman John Sharp attacked Qantas’s lack of efficiency compared with his own company’s, which ranked first in on time departures and had the lowest cancellation rate in the first half of the 2014 financial year.
Regional Express has attacked Qantas management. Photo: Andrew Taylor
While Qantas domestic operations ranked second behind Regional Express (Rex) in both categories, QantasLink, it’s regional operator, lagged behind.
”What this shows is there is a lot of things Qantas could do for itself to solve some of its problems, rather than just going to the government and saying please guarantee our debt,” Mr Sharp said.
”Why can’t they be giving us a real challenge at being number 1, in terms of on time departure? They could if they focused on this rather than trying to seek support from the taxpayers to solve their problems.”
Virgin Australia’s regional operation has consistently improved since joining the market in 2011, Mr Sharp said.
”There’s a lot that Virgin seems to be able to do to manage their affairs successfully that Qantas could, and some would argue should, be doing to manage their affairs better.”
The federal government is set to provide Qantas with a debt guarantee, meaning the taxpayer would foot the bill should the airline default.
It is also understood the government will attempt to relax ownership regulations which prevent the airline from majority foreign ownership.
The Qantas Sale Act requires that 51 per cent of the airline be Australian owned. Around 40 per cent of the former national carrier is now foreign owned, which Rex executive chairman Kim Hai Lim said proves that the debate over foreign ownership is ”all smoke and mirrors”.
”Look at the reality, nobody wants Qantas shares as a foreigner, so why are you crying that you need space? Fill up that space first, show that you don’t have space, but that’s not the case for them,” Mr Lim said.
”If it were the case of Qantas versus Ansett, instead of Qantas versus Virgin, Qantas wouldn’t be receiving a guarantee.”
Qantas has previously alleged it is unfair that Virgin Australia is backed by airlines which it believes has close ties with governments. Virgin Australia foreign shareholders include Air New Zealand, Singapore Airlines and Etihad.
”Well, if the Australian government backs Qantas, Qantas will then be a government-backed airline, and so Rex will be confronted with two government-backed airline operations that we will be competing with, and that I think is unfair, that I think is a significant distortion of the marketplace,” Mr Sharp said.
Mr Sharp said that if the government decides to guarantee Qantas’s debt, it should guarantee the debt of the whole airline industry in Australia.
”We all agree with a level playing field, but if you don’t guarantee the other airlines, and only guarantee Qantas, you will be creating an unlevel playing field, and we’ll be on the unlevel part of it. Give us the same guarantees, and other operators the same guarantees that you give to Qantas,” Mr Sharp said.
During the global financial crisis, the Australia government provided back for the country’s financial institutions across the industry. Mr Sharp said the same principals should be applied to not create an uncompetitive environment.
The attack on Qantas comes after Rex reported a 60 per cent fall in first half profit, down to $ 3.6 million.
Passenger numbers fell 5.1 per cent compared to 2012 to just under 550,000.
Rex will not pay an interim dividend.
Rex shares on Wednesday were trading up 3.8% to 82 cents.