Islands Business Exclusive: “Too high,” says Fiji govt of Qantas offer

The Fiji government says the offer price made to it by Australian flag carrier Qantas for its 46.3 percent stake in Air Pacific is “too high”.
Mon, 14 May 2012
(By Dionisia Tabureguci)

The Fiji government says the offer price made to it by Australian flag carrier Qantas for its 46.3 percent stake in Air Pacific is “too high”.

And it wants Qantas to follow procedures outlined in Air Pacific’s Article of Association, which says any offer to sell should be formally made and should a conflict arise on the price offered, the matter is to be taken to an independent arbitrator who will then appoint an independent valuer to value the shares.

“The Fijian government remains keen to buy Qantas shareholding in Air Pacific Ltd and is committed to negotiating a sale price with Qantas in good faith and in a fair and transparent manner as set out in my letter (to Qantas),” said Fiji’s attorney general Aiyaz Sayed Khaiyum, who is also Fiji’s minister for Civil Aviation.

Qantas, whose low cost subsidiary Jetstar operates flights between Fiji and Australia and directly competes with Air Pacific, indicated two years ago it wanted to sell its stake in Air Pacific for F$70 million to the Fiji government.  

It emerged today at a press conference held by Sayed-Khaiyum in Suva that Qantas’ offer price was in line with a valuation it commissioned on the value of the Fijian flag carrier.

The valuation by Australian valuation firm Lonergan Edwards valued 100 percent of Air Pacific at between F$145m-F$165m and Qantas’ 46.3 percent shares at between F$67-F$76 million.

Qantas is proposing to sell its shares at F$70 million.

“We believe that the offer is too high for the value of the shares,” said Sayed-Khaiyum. “The worth of the shares by way of reference the last sale of shares in Air Pacific was in approximately early 2006, when the Solomon islands government was selling approximately one percent of its shares in Air Pacific. They offered it to the then Fiji government who did not want to buy it. Qantas bought those shares for about $1.74 a share but Air Pacific’s financial position then was a lot better then before they made those consecutive years of loss.”

Qantas is being contacted by Islands Business Magazine for a comment on the issue.

Today’s press conference led with an announcement by Fiji’s Prime Minister Voreqe Bainimarama of a new name for the national airline.

Effective from 2013 at the first delivery of the airline’s new Airbus 330-200, it will be called Fiji Airways, the original name of the company when it was set up 70 years ago.

The name change, said Bainimarama, will help the national carrier capitalize of the success of the “Fiji” brand.