Asset sales option for Qantas

Qantas could quickly raise hundreds of millions of dollars in non-core asset sales to help ease its liquidity squeeze, investment analysts say.

Qantas could quickly raise hundreds of millions of dollars in non-core asset sales to help ease its liquidity squeeze, investment analysts say.

At the same time, lobbying efforts by Qantas appear to have won over Labor. Shadow treasurer Chris Bowen on Sunday said he believed the air carrier was effectively too important to fail and Labor would be open to the idea of the federal government intervening to support the airline.

Even so, the Abbott government continues to hold firm in the face of Qantas' appeals for support. Parliamentary Secretary to the Prime Minister Josh Frydenberg disagreed about the need for government intervention.

"We do not want it to fail, but it's a commercial company and it needs to get its house in order and make the adjustments necessary so it can return to a profit," he told Sky News on Sunday.

Qantas will shed 1000 jobs over the next 12 months, impose pay freezes and make deep cuts across the board as it forecast losses could run to as deep as $300 million for the first half of this financial year.

The airline claims yields are continuing to fall as competitors - particularly Virgin Australia - boost capacity here and offshore.

Virgin Australia is backed by major international airlines, with Singapore Airlines, Air New Zealand and Etihad Airways each holding a 20 per cent stake.

One day after Qantas warned of its financial woes, ratings agency Standard & Poor's cut the airline's credit rating to junk status - or BB+ with a negative outlook - due to it bleeding red ink and expectations that the "cyclical and structural" headwinds will persist. Moody's placed its Baa ratings on Qantas on review.

Brokerage Deutsche Bank has identified non-core assets that could easily be sold to raise funds to help bolster the airline's balance sheet. This includes releasing equity by entering a sale-and-leaseback arrangement for the $7 billion worth of aircraft it has on the balance sheet - excluding debt.

Other areas could include selling the Sydney Airport Terminal lease to Sydney airport; such a move could raise $400 million. The sale of Qantas' freight business could raise about $360 million.

Some more complicated transactions include offloading the frequent flyer business and selling a stake in its domestic business.

Deutsche analyst Cameron McDonald tipped Qantas' full-year result could be a loss of more than $600 million. "The [aviation] industry is clearly still struggling to absorb the capacity growth from financial 2013 and into this year."

With AAP

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