Asia Times: Qantas shares sink as investors react


	September 13, 2001	atimes.com

Oceania

Qantas shares sink as investors react

SYDNEY - Investors bailed out of Qantas Airways Ltd shares on Wednesday as security fears gripped airlines across the globe. EL & C Baillieu Stockbroking director Richard Morrow said that investors were selling airline stocks in the wake of terrorist attacks in the US overnight.

The wave of attacks involved four passenger aircraft, two of which were operated by American Airlines, which is one of Qantas's alliance partners worldwide. Qantas said that it believed the six people flying as Qantas codeshare passengers on the hijacked American Airlines Flight 77 from Washington were US residents.

By late morning, Qantas shares were 32 cents lower at A$3.12 (US$1.61), after at one stage falling to a low of A$2.95 (US$1.53).

"Airlines around the world were fairly weak and in particular British Airways in the UK," which is Qantas's 25 percent shareholder, Morrow said. "There's also a certain amount of panic selling so it's difficult to say when it will stop. That's definitely one of the reasons for it falling like it did."

Morrow said that there are also concerns over the impact on the international carrier's earnings, with all American flights grounded. All planes have been grounded across the United States by the Federal Aviation Administration, after two aircraft crashed into the upper floors of both World Trade Centre towers minutes apart. A short time later a third plane slammed into the Pentagon.

Falkiners Stockbroking managing director Hugh Robertson said that Qantas investors may have over-reacted to the events. "I think Qantas is probably all right," Robertson said. Robertson said Qantas should rebound with the broader Australian sharemarket. "I think we've probably seen the worst of it," he said.

The overseas disaster unfolded as Qantas mades its final decision on its involvement with troubled rival Ansett. Qantas said that it will not purchase the financially stricken airline's assets. Qantas chief executive Geoff Dixon said Ansett's problems were far too great for the airline to take on. After discussions with the Australian Government and the Australian Competition and Consumer Commission, Qantas undertook an examination of the Ansett Group of Companies on Tuesday.

Dixon said that Qantas has looked closely at Ansett in the limited time available. "While understanding the difficulties facing Ansett staff, we could not, in any way, find a way to go forward with a purchase. Ansett's problems are far too great for Qantas to take on," he said. Ansett is a subsidiary of Air New Zealand Ltd.

Qantas chairman Margaret Jackson said that the board has met three times in the past three days to consider the purchase. "This has been a difficult decision because of the national interest issues," she said. However, the Board was conscious of its responsibility to Qantas shareholders and staff and the economics of the proposal, she said. "While we would have liked to have assisted in keeping Ansett flying in some form, the implications for our own balance sheet and future profitability must come first." Dixon said that the acquisition would have been "a negative for Qantas".

(Asia Times Online/Asia Pulse)