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Date : 27/03/2023

Qantas Airways (ASX: QAN) Shares Are Down Amid Takeover Delays

Qantas Airways Ltd (ASX: QAN) is Australia’s largest airline and one of the world’s oldest airlines, founded in 1920. The airline is headquartered in Sydney and operates domestic and international flights to over 85 destinations worldwide.

The airline has over 200 aircraft fleets and operates under two brands: Qantas and Jetstar. Qantas Airways Ltd is known for its outstanding safety record. It has been rated the world’s safest airline by Airline Ratings for several years. The airline is also committed to sustainability and reducing its environmental impact, aiming to reach net zero carbon emissions by 2050.

The current decline of Qantas shares is related to its delayed acquisition of Alliance Aviation Services. This has caused severe uncertainty among investors. Let’s discuss the major details of the whole saga.

QAN: Why Is Qantas Interested In Acquiring Alliance Aviation Services?

Australian airline Qantas Airways Limited has been planning to acquire Alliance Aviation Services, a leading provider of contract, charter, and allied aviation and maintenance services in Australasia. Qantas already owns a 19.9% stake in Alliance. The proposed deal aims to acquire the remaining 80% stake in an all-scrip transaction.

The Qantas-Alliance deal was announced in May 2022 when the Qantas share price was trading at $4.75 per share, valuing the 80% stake at $614 million. Qantas CEO Alan Joyce said that the acquisition would allow QantasLink to better compete in the highly competitive charter segment, especially given the shared fleet type of Fokker aircraft.

With this acquisition, Qantas Airways Ltd could expand its reach into the essential services sector, such as mining, energy, and government sectors, where Alliance Aviation is a leading provider of contract, charter, and allied aviation and maintenance services.

QAN: What Has Caused The QAN Shares To Drop?

The primary cause of the fall of QAN shares is the recent delay in the review process of the proposed acquisition of Alliance Aviation Services by the Australian Competition & Consumer Commission (ACCC).

Amid the takeover delays, this has created uncertainty in the market, leading to concerns over the deal’s feasibility. The market is concerned that the ACCC may have reservations about the proposed acquisition. The market is closely watching this development. Any further delay in the ACCC’s review could result in further losses in Qantas shares.

QAN shares are currently down and trading at $6.22, and have declined around 4% today. The current market cap of the company is approximately 11.3 Billion AUD.

Qantas Airways ASX QAN shares news

QAN: The Significance Of The Delay In ACCC’s Review Of The Acquisition

The latest development in the proposed acquisition of Alliance Aviation Services is a significant cause of concern for Qantas Airways Ltd. The acquisition was expected to be earnings per share accretive. Qantas was counting on it to strengthen its position in the competitive charter segment.

With the ACCC’s delay in reviewing the proposed acquisition, the timeline for the deal’s completion is still being determined, creating uncertainties for Qantas and QAN stock investors. Qantas will now have to wait for the ACCC’s decision and hope that the delay will not significantly impact the proposed acquisition.

QAN: What does the future hold for Qantas shares?

The future of ASX QAN shares depends on various factors, such as the airline’s performance, the aviation industry’s state, and global economic conditions. However, the current situation with the proposed acquisition of Alliance Aviation Services has created significant uncertainties for the airline, and the market is closely monitoring any further developments. Investors will eagerly await the ACCC’s decision and any updates on the proposed acquisition to determine the impact on Qantas shares.

It is crucial to note that while the delay in the ACCC’s review has resulted in a decline in the QAN share price, it may not necessarily impact the airline’s long-term performance. Qantas has a strong position in the aviation industry, and any strategic acquisition would only strengthen its position in the market.

QAN: Qantas’ growth strategies and initiatives

Qantas Airways Limited has been focusing on several growth strategies and initiatives to improve its financial performance. One of its key initiatives is expanding its domestic and international network by introducing new routes and increasing flight frequency. This strategy aims to capture the demand for travel within and outside of Australia and will increase Qantas’ market share.

Additionally, Qantas has been investing in its loyalty program, Qantas Frequent Flyer, which has significantly contributed to the airline’s profits in recent years. The loyalty program has over 13 million members, and Qantas plans to leverage this customer base to drive revenue growth.

QAN Financials

Qantas Group has announced a remarkable turnaround by returning to profitability after enduring three consecutive years of losses of $7 billion due to the pandemic. For the first half of FY23, the financial analysis of the ASX-QAN group posted a record result of $1.43 billion in Underlying Profit Before Tax as of 31 December 2022, representing a 49% increase from the previous first-half record set in FY18. Moreover, the company achieved a Statutory Profit After Tax of $1.0 billion, while the Statutory Earnings Per Share stood at 53.9 cents.

The Group has $5.4 billion in liquid assets as of 31 December 2022, including $4.1 billion in cash. With a steep drop from the preliminary figures ($3.9 billion to $2.4 billion), net debt is far below the aimed-for level.

Concluding Thoughts

The news of the Qantas-Alliance acquisition deal is facing further delays, which has impacted the Qantas share price. However, Qantas stock investors should keep in mind that the company has other growth strategies and initiatives in place that could drive the financial performance in the long term.

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