British Airways today informed Qantas of its intention to divest its 18.25 percent share in the Australian carrier, citing the need to lower debt and strengthen its balance sheet. BA, which has held a piece of Qantas since 1993, expects the sale to generate more than A$1 billion (US$695 million).
Both carriers said the transaction would have no impact on their existing relationship, which includes sharing codes as part of mutual participation in the Oneworld alliance and an unrelated joint services agreement covering flight schedules, sales and operations between Australia, Southeast Asia, the United Kingdom and continental Europe.
"A strong balance sheet will place British Airways in a robust position for any future European consolidation," said BA CEO Rod Eddington. BA currently is a minority shareholder in Spain's Iberia.
Qantas CEO Geoff Dixon also indicated his carrier is eyeing regional relationships. "We will seek to further strengthen our commercial position to enable us to take a leading role in any suitable consolidation opportunities that may arise in the Asia/Pacific region," he said.
Separately, Qantas today detailed plans for reducing travel agency commissions. Effective January 2005, international base commissions will be reduced from 9 percent to 7 percent, while domestic New Zealand and trans-Tasman commissions will be cut from 5 percent to 1 percent. In July 2005, Qantas similarly will reduce domestic Australian base commissions from 5 percent to 1 percent.
"Airfares have never been more competitive, with travelers enjoying very low pricing for both domestic and international destinations," said Rob Gurney, Qantas head of sales and distribution. "However, distribution costs remain high and the current base commission structure is simply not sustainable in such a low fare environment."