THE DISTILLERY: Qantas questions

Jotters are mixed on the ramifications of Qantas' new Asia partnership, while others look at BoQ's capital raising.

Qantas' newly-unveiled Hong Kong joint venture may have lifted the company's share price, but it remains to be seen whether the airline's latest foray into Asia can do the same for its bottom line. That's the message from the commentariat this morning, which gives the flying kangaroo's new plan a cautious tick of approval – although some jotters are more enthusiastic than others. At The Australian Financial Review, Matthew Stevens says there might be more to the deal than meets the eye, while The Age's Malcolm Maiden looks at what Qantas might glean from the low-cost offering. On the other hand, Chanticleer columnist Michael Smith argues that the announcement will simply shift the focus to Jetstar's weaker parent, and The Sydney Morning Herald's Ian Verrender brings up an earlier Asian adventure Qantas would rather forget. Elsewhere, more ink is spilled as commentators dissect Bank of Queensland's capital raising – including what it might teach the Sunshine State's incoming premier, Campbell Newman.

But first, The Australian Financial Review's Matthew Stevens uncovers a hidden financial gem in Qantas' new partnership with China Eastern.

"The other big plus in the JV structure is that it means Joyce can put off-balance sheet a bunch of planes. Back in 2011 Qantas signed up to take 110 new-age planes from Airbus in a deal then worth nearly $US10 billion ($9.57 billion). As of yesterday, all of those planes now have a productive home. Qantas will provide seed for both the Japanese and Hong Kong ventures with its planes and thus, by 2015, will relieve the parent airline’s balance sheet of something better than $2 billion worth of debt."

Writing in The Age, Malcolm Maiden details how the new low-cost offering could ultimately help Qantas take on premium carriers that are already entrenched in the region.

"The deal may also boost Qantas itself as it competes with Cathay Pacific for passengers flying from Australia into Asia, and China in particular. The new venture does not compete head on with Cathay and Dragonair because they are full service airlines. Price-sensitive customers who have been flying Cathay and then connecting with Cathay's China-based arm, Dragonair, might be tempted to switch to a Qantas-Jetstar Hong Kong combination however, given that Jetstar Hong Kong says it will be selling seats at about half the price of full-service carriers."

However, Michael Smith, Chanticleer columnist at The Australian Financial Review, says the deal is better for Jetstar than Qantas, where it will raise some uncomfortable questions.

"This [joint venture] should provide Jetstar a golden opportunity to tap into a lucrative market if it gets it right. Jetstar has been working on the deal for four years and looked at alternative hubs in Macau, Indonesia and the Philippines. While good for Jetstar, the deal puts a question mark back on the future of Qantas’s struggling mainline international operations. Joyce will be challenged to find alternatives to grow the business, particularly when Qantas is devoting its attention to its more lucrative offspring Jetstar which is cheaper to operate and more profitable."

That's a theme that Ian Verrender continues at The Sydney Morning Herald, where he adds another warning as he recalls one of Qantas' earlier attempts in Asia.

"Airlines are notoriously fickle businesses and operating in Asia can be fraught with difficulties. Pair those two variables and you have a formula for a high-risk and potentially volatile business proposition, as Qantas has discovered with its Vietnam operation. Qantas bought a minority stake in Pacific Airlines in 2007, with various Vietnam government agencies owning the rest. The airline haemorrhaged cash from day one and last year became the whipping boy in an internal political dispute between warring government factions that resulted in the detention of its two senior Australian executives."

The jotters are also busy examining a move by Bank of Queensland's new chief executive Stuart Grimshaw, who surprised the market with a bigger-than-expected $450 million capital raising off the back of a profit warning. The Australian's John Durie supports the move, but says he's waiting to see what Grimshaw – and the bank's stock price – does next. In the same paper, Tim Boreham suggests Queensland's new premier, Campbell Newman, should visit Grimshaw for a lesson in clearing the decks and resetting shareholder expectations, in a relatively up-beat assessment of BoQ's latest moves.

At The Age, Michael Pascoe cuts through all the 'can-do' rhetoric surrounding Newman to detail what the incoming premier won't be able to do – which is quite a lot, apparently. And The Australian Financial Review's Tony Boyd writes that the Huawei Technologies controversy does not reflect well on Australia, and will distance the nation from one of the largest inventors of telecoms intellectual property.

Finally, The Australian's Richard Gluyas keenly awaits the High Court's ruling on Fortescue's access to Pilbara railways, which the commentator says could shake up competition law and the structure of the Australian Competition Tribunal.

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