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Middle east meets west - the challenge Qantas must win

Created: 21 Nov 2013

Dr Chris Baumann and Professor Paul Gollan wrote an article published in The Conversation.

Publication: The Conversation
Date: 21 November, 2013
Authors: Dr Chris Baumann and Professor Paul Gollan

Introductory excerpt:

This week a stoush over foreign ownership has erupted between Qantas and Virgin Australia over Virgin’s A$350 million capital raising that will see three foreign airlines - Etihad Airways, Air New Zealand and Singapore Airlines - substantially increase their holdings.

The raising has resulted in the shares of the three airlines rising from 63% of Virgin to 70% as the company issues new shares.

Qantas CEO Alan Joyce claims the deal significantly disadvantages his airline given the foreign ownership rules on Qantas. Under the Qantas Sale Act foreign ownership of Qantas is restricted to 49%. Joyce argues the capital injection amounts to Virgin being subsidised by what are essentially government-owned airlines. Qantas even circulated an online petition claiming foreign airlines would control Virgin.

However, Virgin Australia Chairman Neil Chatfield has told shareholders at the company’s annual meeting in Brisbane there will be no change in control and Virgin would continue to be Australian-owned.

Read the full article "Middle east meets west - the challenge Qantas must win".