PRIME MINISTER Tuesday 2 June 1992
JOINT STATEMENT BY THE PRIME MINISTER THE RON PAUL
KEATING, MP; THE MINISTER FOR FINANCE, THE EON RALPH
WILLIS# MPl; AND,* THE MINISTER FOR TRANSPORT AND
COMMUNICATIONS, SENATOR THE EON BOB COLLINS
The Government has approved the sale of Australian
Airlines to Qantas.
It has also endorsed sale of 100 per cent of the combined
airline, subject to approval by the Australian Labor
Party. The Government has also decided to establish an
independent Tribunal to allocate international aviation
routes.
These decisions where taken by Cabinet last night and
agreed by Caucus this morning.
The decision to sell Australian Airlines to Qantas
follows detailed examination by the Department of
Finance's Task Force on Asset Sales of initial indicative
bids for Australian Airlines.
The main factor bearing on the Government's decision was
the increased value placed on the synergistic benefits
which will result from operating the domestic carrier and
Qantas together.
A sale agreement will be signed tomorrow between Qantas
and the Government under which Qantas will pay $ 400
million for 100 per cent of Australian Airlines.
Settlement of the sale will be finalised by the end of
September after which Australian Airlines will become a
wholly-owned subsidiary of Qantas.
The acquisition will allow for significant synergistic
benefits and operational efficiency gains which will
increase the ultimate sale value of Qantas as well as
benefiting the travelling public.
Taken together with the new aviation regulatory changes
also announced today, this transaction will ensure a
strong and viable aviation industry in Australia in
future.
As part of the transaction the Chairman of Qantas, Mr
Bill Dix, and the Chief Executive, Mr John Ward, will
Join the Board of Australian Airlines as soon as
possible. In proposing to sell 100 per cent of Qantas the
Government will retain a " golden share" providing a
number of national safeguards.
These will include requirements that:
no more than 35 per cent of voting equity be
sold to foreign interests;
the trading name " Qantas" be retained for
international air transport passenger services
provided by the company;
the head office of Qantas remain in Australia;
and a majority of Qantas' Board be Australian
citizens.
The trade sale of Qantas will continue contingent with
settlement of the acquisition by Qantas of Australian
Airlines. The Government expects no diminution of interest in
Qantas by prospective purchasers as a result of this
acquisition. In fact, a number of prospective purchasers have
indicated that this acquisition would strengthen their
interest in the combined entity.
Prospective purchasers already approved for access to the
next and final stage of the trade sale of
Qantas/ Australian Airlines are being advised.
The Government will also seek expressions of interest
from new bidders attracted by the proposed revised
ownership arrangements.
The parties concerned will be permitted to conduct their
own detailed " buyer due diligence" investigations into
the combined entity prior to submitting binding bids.
The trade sale process is expected to be completed by the
end of this calendar year.
Significant resources are being allocated to preparing
for a public float of the remaining eguity in Qantas
which will be undertaken in the period immediately
following the trade sale.
With the decision to sell 100 per cent of Qantas, this
will involve a major equity raising, recapitalisiig the
airline on a competitive commercial basis and returning
well over $ 1 billion to the Commonwealth Budget.
INDEPENDENT TRIBUNAL:
An independent Tribunal will be responsible for assessing
applications by domestic carriers for international route
and capacity entitlements on the basis of criteria to be
determined by the Government.
Licensed airlines will be eligible to seek the right to
fly international services to the many countries where
multiple designation is provided under existing bilateral
air services agreements.
Until the Tribunal is established, Qantas will continue
to be Australia's designated international airline, other
than on trans-Tasman routes.
The Government has decided to clearly separate route
authorisation and carrier selection procedures from its
continuing regulatory and administrative functions, by
establishing an independent Tribunal. This separation is
consistent with practices in a number of major aviation
countries. The Government's objective is to introduce a process
which will be clearly seen as being open, transparent and
accessible to all parties and the Government will be
legislating to give this effect.
At the same time, the Government has ensured that such
matters as tourism and trade, route economies, incumbent
airlines' rights and entitlements, the interests of other
Australian carriers and broader national interests are
adequately reflected in the criteria to be considered by
the Tribunal.
The combination of existing unused capacity and
additional capacity, arising out of bilateral
negotiations, will provide the opportunity for the
commencement of operations by competitive Australian
carriers on international routes.
The new approach provides for the gaining of potential
benefits and exposure to competition for all airlines
under a timetable where access to new markets is aligned
with competition in existing markets.