Qantas prepared to give up Sydney slots
Sunday, May 6, 2001 at 22:00 JST
SYDNEY — Qantas Airways Ltd said on Sunday it would accept losing a third of the Sydney airport slots held by Impulse Airlines Ltd to satisfy the anti-monopolies watchdog's concerns on its takeover of the troubled no-frills carrier.
Defending the plan against rival airlines arguing it would stifle competition, Australia's largest airline said that the Australian Competition and Consumer Commission (ACCC) had set a precedent on slots in another local airline takeover.
Qantas also said Impulse would be placed in liquidation after its major institutional shareholders withdrew financial banking if the ACCC did not approve its plan by May 14.
Ansett Australia, Australia's second biggest domestic airline, and British businessman Richard Branson's cut-price newcomer Virgin Blue [VA.UL] oppose the Qantas-Impulse marriage.
Qantas chief executive Geoff Dixon said that the ACCC had forced Ansett, a subsidiary of Air New Zealand Ltd, to lose 30 percent of the Sydney airport slots held by Hazelton Airlines Ltd before approving its acquisition.
"I would have thought there has been a precedent set when Ansett took over Hazelton and we would imagine something similar to that," Dixon told Channel Seven television.
But Virgin Blue chief executive Brett Godfrey said that he was sceptical Impulse was financially crippled after Impulse chief executive, Gerry McGowan, had touted a profit about a month ago and then a small loss about two weeks ago.
"I would be fairly sceptical that all the money has just disappeared to the point that they're failing," Godfrey told Channel Nine television on Sunday.
Under the Qantas proposal, the budget airline would cease flying under its own brand and contract its fleet to Qantas.
Qantas would then lend Impulse around A$50 million to buyback Impulse's institutional shares and provide working capital.
Dixon said that Qantas, which has issued two profit warnings in the past four months, would incur A$250 million in extra fuel costs for fiscal 2001/02 while the weak Australian dollar would cost more than A$110 million.
Shares in Qantas, in which British Airways Plc has a 25 percent stake, closed at A$3.20 on Friday. (Reuters News)
Can anyone explain a bit more on this????