Intelligent Investor

Qantas Airways Limited

By · 21 Nov 2006
By ·
21 Nov 2006
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Recommendation

Qantas Airways Limited - QAN
Current price
$5.86 at 16:35 (24 April 2024)

Price at review
$4.90 at (21 November 2006)
All Prices are in AUD ($)

Australia’s national airline recently announced that it had received an approach from a private equity consortium including Macquarie Bank and the Texas Pacific Group. There's no doubt Qantas is a very well run company, it has a strong brand and it’s one of the most profitable airlines in the world. However, we haven’t been fans, mainly because running an airline is a very tough business.

The private equity buyers obviously see things differently. It’s a strange one for them as airlines are notoriously capital intensive and competitive. While other private equity deals have created excitement, the Qantas deal is facing some headwinds. The Government has entered the fray and so has the public if you believe what’s written in the newspapers.

The stock is up 61% since our last update, in issue 203/Jul 06 (Avoid – $3.05). It will be interesting to watch, but we continue to recommend that you do so from the sidelines. AVOID.

IMPORTANT: Intelligent Investor is published by InvestSMART Financial Services Pty Limited AFSL 226435 (Licensee). Information is general financial product advice. You should consider your own personal objectives, financial situation and needs before making any investment decision and review the Product Disclosure Statement. InvestSMART Funds Management Limited (RE) is the responsible entity of various managed investment schemes and is a related party of the Licensee. The RE may own, buy or sell the shares suggested in this article simultaneous with, or following the release of this article. Any such transaction could affect the price of the share. All indications of performance returns are historical and cannot be relied upon as an indicator for future performance.
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