Qantas takeover attempt: unadulterated greed

May 18, 2007

The shambles of the Airline Partners Australia (APA) private equity takeover attempt for Qantas demonstrates the greed and rapaciousness of this rotten capitalist system. All parties involved in the grubby business have shown up the irrationality of capitalism.

The history of this bid runs something like this: APA announces in November 2006 that it is going to make a private equity takeover bid for Qantas worth $11.1 billion. These kinds of private equity deals usually take the path of the new owners dismembering the company and selling it off piecemeal.

The Qantas board of directors happily accepted the deal, endorsing and recommending it to the shareholders. The senior management stood to make in excess of $300 million between them if the deal went through (Qantas chief executive Geoff Dixon stood to make $8 million alone if APA succeeded).

Then there are the large shareholders, circling around the whole smelly business, trying to sniff which option — selling or not — will land them more money. But two rebel groups (Balanced Equity Management and UBS Global Asset Management) threw spanners into the works, holding out because they believe Qantas is worth more than $5.45 a share.

This sent Qantas executives into a tailspin, frantic at the thought that they might lose the fat payments it was going to receive from APA. In her anxiety, Margaret Jackson, chairperson of the Qantas board, claimed that Qantas would be dangerously "destabilised" if the bid did not go through. She said that the Qantas share price would crash because the 40% of the share register held by hedge funds would be dumped, and that any shareholders that did not see this and therefore support the bid "have a mental problem with how the market works".

But when Balanced Equity Management and UBS Global Asset Management continued to hold out, and APA did not convince enough shareholders to sell, the bid seemingly collapsed. The Qantas board once again went into a tailspin. It was accused of attempting to sell off the airline on the cheap. So, in an incredible about-face, it released new figures that demonstrate Qantas is, in fact, doing a roaring trade.

Qantas looks set to easily outdo its record pre-tax profit of $939 million it forecast two months ago. They are doing a fine job, thank you very much, and do not need APA to come along and fix the shop after all.

What a shameless exhibition of unadulterated greed — a perfect demonstration of the irrationality of capitalism.

All this takes place amid genuine concern among Qantas workers for their future. Where, in the endless discussion and analysis of this "Pythonesque" chaos (as Balanced Equity Management's director, Andrew Sisson, calls it in the Australian Financial Review), is the concern for the people that make their living working for Qantas? What of the workers who would undoubtedly lose their jobs if APA did succeed in its plan to strip Qantas to recoup the debt it would incur in this takeover bid?

What of the maintenance workers and call centre workers who face uncertainty over their future, with the likelihood of services being sent offshore to cut costs? What of the Qantas workers who are already putting up with unfair practices such the Brisbane women who were promised four-day work weeks after returning from maternity leave and were instead forced to work a five day week with the boss telling: "You should have thought about that before you had kids."

We already know that Qantas executives favour Work Choices and individual contracts (Australian Workplace Agreements), as stated on the company's website. What of the Qantas workers already forced onto AWAs? Surely things would only have been worse in the event of an APA takeover? Should we at least be thankful that it seems APA has been frustrated in their attempt to claim Qantas as a prize?

The roots of this whole debacle go back to the original privatisation of Qantas in 1995. The Paul Keating Labor government's privatisation of the national carrier has led to jobs being cut, individual contracts being introduced and maintenance jobs at Qantas being outsourced.

Of course, social justice and human need take a back seat to the capitalist imperative of profits first. The virtues of privatisation, much-vaunted by neoliberals, are really only opportunities for financial raiders seeking to make a killing. What further demonstration of the ugly nature of capitalism is needed than the history of this bid, and indeed of the whole privatisation of Qantas?

The real solution to this dog-eat-dog, profit-hungry chaos lies in re-nationalising Qantas and running it for the benefit of its workers and its passengers.

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