- Qantas will be acquiring the remaining shares of its 20% owned Alliance Aviation.
- The acquisition is subjected to Alliance shareholders’ approval.
- Acquiring Alliance Aviation will help Qantas to serve the rising resource sector better.
The shares of Qantas Airways Limited (ASX:QAN) were spotted trading 1.146% lower at AU$5.605 per share at 11:00 AM AEST on the ASX today (5 May). Approximately 2 million shares of Qantas were traded after the stock market opened for trading on Thursday morning.
The ASX-listed airline operator shared that it has agreed to acquire 100% stakes in another Australia-based airline operator- Alliance Aviation Services Limited (ASX:AQZ).
The share price of Qantas has gained approximately by 17% on the ASX over the past 12 months. On the other hand, Qantas’ year-to-date share price also gained about 9% at 11:00 AM AEST on the ASX today (5 May).
Details of Qantas’ acquisition of Alliance Aviation:
Qantas informed that it has signed an agreement to acquire 100% of Alliance Aviation. This proposed acquisition will help Qantas to better serve the rising resources sector. However, Qantas also informed that the execution of the agreement is completely subjected to votes from Alliance Aviation shareholders and the completion of clearance, after which Alliance Aviation would be seen as a wholly-owned part of Qantas.
Qantas is already the owner of 20% of Alliance Aviation since February 2019. At that time, the company expressed its long-term interest in acquiring 100% of Alliance Aviation.
Now, the recently signed agreement by Qantas, empowers the company to further acquire the remaining 80% of Alliance Aviation through a scheme of arrangement. According to the scheme of the arrangement, every Alliance shareholder is likely to receive Qantas shares worth AU$4.752 each for every Alliance share they own.
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Qantas would issue new shares valued at about AU$614 million in a transaction. These new shares are expected to be EPS accretive for Qantas shareholders before synergies.
On the other hand, Alliance Aviation owns a fleet of 70 jet aircraft that is capable of accommodating 100 people each, making them suitable for charter operations.
Qantas is the biggest single customer of Alliance Aviation with a long-term agreement that sees Alliance Aviation operate up to 18 newly acquired E190 jets for QantasLink. This arrangement has enabled the company to launch new direct routes and increase frequency across regional Australia.
Alan Joyce, the CEO of Qantas, believes that the acquisition of the remaining shares of Alliance Aviation indicates QantasLink’s capability to compete in the highly competitive charter segment, especially given the shared fleet type of Fokker aircraft.
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Qantas Airways Limited is an ASX-listed airline operation which falls under the ASX industrial sector. The company is popularly known for selling international and domestic holiday tours, airline services and relevant support activities such as catering, ground handling, information technology, engineering, and maintenance. Qantas currently holds a market capitalisation of AU$10.69 billion.