Lifting foreign investment caps won’t unshackle Qantas

By Stephen Bartholomeusz

Theoretically Qantas might be able to emulate Virgin and restructure itself so that foreign investors and airlines could own more than 49 per cent of the group and receive the economic benefits of majority ownership while technically maintaining Australian majority ownership of its international business.

Changes to the Qantas Sales Act to ease the restrictions on foreign shareholders might have helped lower Qantas’ cost of capital in the days when it used to be one of the world’s most profitable airlines, before the flood of post-crisis capacity from hub carriers undermined its international business and Virgin attacked its core business franchise and ignited the capacity war.

Removing the 25 per cent ceiling on individual foreign shareholdings and the 35 per cent limitation on foreign airline shareholdings – while retaining a 49 per cent limit on foreign ownership generally – removes the Qantas-specific restrictions on foreign investors and notionally aligns its position with Virgin Australia’s.

Read more here: Business Spectator


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