Quantas Airways Ltd agrees to Onex Corp deal

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Onex finally convinced the largest airline in Australia to accept their offer of $11.1 billion, after being turned down previously. Quantas Airways agreed to the take over, only after Onex and its partners revised their conditions and settled for $5.60 a share. Due to the strict government regulations, foreign owners are limited to owning 49 percent of the airliner. Onex will receive a return investment of $445 million, with a 12.5 percent stake. Investors that are located outside of Australia may not own more than a quarter, which puts Macquarie Bank and Allco, as the major shareholders. A minor share will be owned by the Texas Pacific Group in San Francisco.

The proud new owners are enthusiastic about the launch of Jetstar, which will be the lower cost extension of Quantas Airways. They have very high expectations for Jetstar, as the distances between major cities are great and due to the overwhelming grip that Quantas Airways already has on the Australian market. Quantas Airways also owns many other businesses and is currently designing a strategy to lower costs. The cost reduction program and the take over, has many employees very nervous, as they believe that the new owners will out source the maintenance operations to lower wage countries, even though the buyout firms have indicated this option has not been considered.

The consortium has assured the public that Quantas Airways will remain Australian and that Quantas management does not intend to break up the airline that has become an Australian icon over the years. Bob Mansfield, director of the Airline Partners Australia, said that everyone involved is aware of the responsibility that now lies with them and reassured employees that there are no plans to cut the regional services.

The Australian Prime Minister, John Howard, has also expressed his feelings in regard to the take over, by remaining optimistic about the carrier, and that the shareholders will take any changes in consideration before implementing them. He has also stated that new investments into the industry can be an advantage, but that the market will be the deciding factor.

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