AUS
NZ
UK
CA
USA
IND
Highlights
- In 2019, Qantas Airways acquired a 19.9% stake in Alliance Aviation Services Limited.
- Qantas received a significant jolt after the acquisition when the ACCC launched the investigation in 2020.
- Alliance has stated today that the ACCC would not initiate enforcement action regarding Qantas' acquisition.
Shares of aviation services firm Alliance Aviation Services Limited (ASX:AQZ) buzzed in the green territory to trade around 3% higher at AU$3.860 a share today (at 10 am).
On the heels of the Australian Competition & Consumer Commission's (ACCC) recent announcement on Alliance's 19.9% purchase of Qantas Airways Limited (ASX:QAN), another aviation firm, also entered the green zone, trading marginally higher at AU$5.210.
For one year, the industrial sector has been booming, with an 8% increase despite the challenging scenario caused by COVID-19 induced lockdowns. In one year, QAN and AQZ declined 1% and 13%, respectively, in contrast to the broader industrial sector. Both QAN and AQZ failed to shift in sync with the broader sector in the middle of the year and faced the burn of COVID-19 induced lockdowns by plunging 9% and 8% in six months, respectively. With the lifting of the lockdowns, both firms have recovered from the burn of COVID-19 and resumed operations, while the stock price has begun to rise. The share prices of QAN and AQZ grew by 14% and 15%, respectively. In addition, S&P/ASX 200 Transportation (AXTRJD) was trading 0.32% lower at 11,836.34 (at 11 AM AEST).
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Good read: Inside Qantas’ (ASX:QAN) plan to achieve net zero emissions by 2050
About the companies
Alliance is Australasia's major provider of allied aviation, charter, contract, and maintenance services, employing over 900 full-time workers.
Source: © Iwikoz6 | Megapixl.com
Australia's flag carrier and the largest airline in terms of overseas destinations, international flights, and fleet size is Qantas Airways Limited. It was launched in November 1920 and is the world's third-oldest airline currently in operation.
However, Alliance is a significant rival to Qantas, notably in regional markets and for fly-in and fly-out mining services.
ACCC's declaration on Qantas' acquisition of Alliance
Alliance Aviation Services Limited has stated today that the ACCC would not initiate enforcement action regarding Qantas Airways Limited's 19.9% acquisition of Alliance.
While the announcement came as a huge relief for QAN, we'll go through how the conflict began. In 2020, the ACCC launched an investigation into Qantas Airways' ownership of a 19.9% stake in Alliance Aviation.
In 2019, Qantas obtained a 19.9 % stake in Alliance, making it the company's single largest shareholder. The ACCC released a statement on 1 August 2019 outlining the ACCC's competition concerns over minority ownership.
According to ACCC, the Australian aviation sector is in considerable upheaval, and they are worried that smaller airlines will not be hampered by their competition. As a result, they began soliciting information from market players to determine whether Qantas's investments in Alliance would influence competition.
What did the ACCC say about the acquisition?
Conclusion
Alliance and Qantas were the subjects of the ACCC's investigation. It examined whether Qantas's involvement impacted Alliance's ability to raise funds, participate in commercial ventures, and consider takeovers. They also looked at whether Qantas attempted to influence Alliance's operations or decision-making.
Qantas received a significant jolt after the acquisition when the ACCC launched the inquiry. Although QAN has issued no statement yet, it is a huge relief for the company to be able to function without interruption.
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