08 September 2004

BA to sell off its stake in Qantas

British Airways (BA) has said that it will sell off its entire shareholding in Qantas within the next 48 hours for what it anticipates will be a £120 million profit.

The company said that the gross sale proceeds from its 18.25% stake are expected to be not less than £425 million – which is £121 million more than it paid out in 1993. Since the original investment BA has received just over £230 million in dividends; it will also receive a final dividend from its Qantas shareholding totalling around £12 million on September 29.

BA said that it intends to use the proceeds to repay part of its existing gross debt which at June 30 amounted to £5.6 billion.

British Airways’ chief executive Rod Eddington said that the sale proceeds would help bulk up a strong balance sheet and place BA in a "robust position for any future European consolidation".

He added: “Our shareholders have had a good return from our investment in Qantas. We now believe it is in our best interests to sell our shares to pay down our debt and continue to strengthen our balance sheet."

The share sale will have no impact on the business relationship between the two airlines and is not linked to joint services agreement (JSA) which continues.

The JSA between British Airways and Qantas has recently been given draft approval for a five-year extension by the Australian Competition and Consumer Commission. The agreement includes joint flight schedules, sales and operations between Australia, South East Asia, the UK and Europe.

(gmcg)