Qantas fears going belly up
SYDNEY - Agence France-Presse
Qantas fears going under if Etihad is given a bigger stake in Virgin Australia. AFP photoAustralia’s Qantas has warned the government it could “go under” if Abu Dhabi-based Etihad Airways is allowed a greater stake in rival carrier Virgin Australia, a report said June 22.
Its executives have been lobbying the government, saying that if Etihad doubled its stake in Virgin Australia it could hurt Qantas by undercutting its domestic fares, The Sydney Morning Herald said.
Etihad has built its holding in Virgin over recent weeks to 3.96 percent and has said it wants to boost it to 10 percent.
The paper said Qantas executives were pushing the government to limit Etihad’s plans, or reduce legal restrictions on Qantas under the Qantas Sale Act, saying otherwise: “We could go under.” A briefing paper cited by the Herald said Qantas feared a Virgin-Etihad partnership would “pick the eyes” out of the most lucrative domestic routes, while ignoring the less profitable services that Qantas flies.
“Virgin/Etihad will be able to flood the market with capacity until its competition is forced to reduce its own operations or worse,” the paper says, according to the Herald.
Qantas said chief executive Alan Joyce and other senior executives were in Canberra this week to speak to lawmakers but would not confirm the report.