Qantas, Fiji deadlock over buyout of Air Pacific stake
From: Dow Jones Newswires
July 01, 2011 10:27AM
AUSTRALIA'S Qantas Airways is struggling to persuade the government of the tropical South Pacific islands of Fiji to pay $FJD70 million ($37.1m) to buy out its stake of national carrier Air Pacific.
According to a copy of the proposal from Qantas sent to the Fijian government last year and seen by Dow Jones Newswires, the Australian airline recommends that Fiji may cancel new aircraft orders; sell and lease back aircraft; refinance a plane hangar; and sell the Sofitel Hotel on Fiji's Denarau Island to fund the acquisition of the 46.3 per cent of Air Pacific owned by Qantas. Fiji's government is the largest shareholder in Air Pacific with a 51 per cent stake.
Alan Joyce, chief executive of Qantas, said in a recent interview: "We're still talking to the Fijian government about the future shareholding.
"Those dialogues will continue but there's nothing more we have to say on that at the moment." Mr Joyce declined to comment on the terms of the offer.
But more than one year since the sale was first raised with the government of Fiji, Qantas is no closer to securing a deal.
The offer comes as Australia's biggest airline rejigs its loss-making international flights business to focus on more profitable routes and amid strained diplomatic relations between Fiji's unelected military government and Australia.
Air Pacific once dominated the lucrative traffic into Fiji, a remote archipelago known for its palm-shaded sandy beaches that attract throngs of tourists. But the airline has struggled to compete since the arrival in 2009 of Virgin Australia and Qantas' low-cost offshoot, Jetstar.
Fiji is only prepared to pay a fraction of what Qantas is demanding for the stake and is concerned about the code-share element of the deal, people familiar with the negotiations told Dow Jones Newswires. One person said that Fiji wanted to pay Qantas about $FJD1 per share for the Air Pacific stake, compared with about $FJD5.50 Qantas is asking for.
As part of its written proposal, Qantas said it would continue to sell space on Air Pacific-operated services to Australia, New Zealand and the US, and jointly develop a code-share mechanism that remunerates each party for placing traffic on each other's planes.
Qantas also offered to step down from Air Pacific's board and said it would be "pleased to provide" two Qantas executives, Simon Hickey and Paul Edwards, as "advisers" to Air Pacific.
Fiji's Attorney-General and Minister for Tourism, Aiyaz Sayed-Khaiyum, told Dow Jones Newswires that Qantas has offered to sell the Fiji government its shares. He said that Qantas informed the government earlier this year that "their offer to sell in excess of $FJD$70 million has not changed".
Air Pacific posted net loss of $FJD65.3m in the year to March 2010, and blamed fare-slashing from Jetstar and Virgin, but revenue was also pressured by the global financial crisis, flooding in Fiji and losses on fuel hedging.
Air Pacific chairman Nalin Patel didn't return calls and deputy chairman Aslam Khan referred inquiries back to the Attorney-General.
Diplomatic relations between Australia and Fiji hit a low point late in 2009 when both countries expelled each other's diplomats.
Bottled-drink company Fiji Water in November closed its operations on the island, citing a huge tax increase.
News Corporation, which owns The Wall Street Journal and Dow Jones Newswires, in September sold its Fiji Times newspaper to a domestic owner after the government insisted that its media companies be owned by Fijian businesses.
Fiji's Prime Minister, Commodore Josaia Voreque Bainimarama, came to power in a 2006 coup.
July 01, 2011
FNPF Board Chair sends his CEO out to the firing squad
Despite public pressure - those truly public and those pretending to be so - the superannuation fund, FNPF Board sends their CEO, Aisake Taito, to be the token face of the body that faces up to the firing squad.
Aisake Taito has stated what we already knew. That the illegal and treasonous reforms to the FNPF would go ahead. And he even irrationally tries to appease irate superannuation fund owners by sweetening the deal.
While Taito tussles with the public on this front, the FNPF Board Chair, Sri Lankan electronic tussles with some annoyed members.is having his own behind the scenes
Even while that drama unfolds, Bainimarama's illegal and treasonous military regime is now forced to face up to a huge IOU totalling $FJD70 mill to Qantas airlines.