||Issue No. 356||21 December 2006|
Interview: The Terminator
Industrial: Vive La Resistance
Unions: Breaking News
History: Seven Deadly Sins
Economics: Back to the Future
Politics: Organising and Organisations
International: Web Retrospective
Review: Shock Therapy
All the Best
High Flyers Go For Gold
The massive sweeteners, set to net CEO Geoff Dixon, alone, $60 million, are key elements in a private equity takeover that would replace around $8 billion in shareholder funds with debt.
Dixon assured Australians nothing would change at the national carrier but the takeover consortium's own paperwork makes a mockery of that assurance.
One of the operations making up Airline Partners Australia, Allco, is specific in its presentation on the deal.
It predicts, under its control, Qantas' annual revenue growth would fall from seven to two percent while profit growth would leap from two to 25 percent.
The figures were prepared for Allco by Macquarie Equities Research, a division of another takeover partner, Macquarie Bank.
Analysts say the only way to deliver on that prediction is by slashing labour costs and services and, possibly, increasing charges.
The Airline Partners Australia proposal will deliver massive fees to financiers - hundreds of millions of dollars.
It would see Qantas delisted from the stock exchange to become a privately-owned company, with $10 billion of the $13 billion purchase price financed by debt.
The bid, headed by Macquarie Bank and US private equity operation Texas Pacific, has been structured to circumvent foreign ownership rules.
Unions, representing 37,000 airline workers, are urging the federal government to intervene on national interest grounds.
Acting AMWU national secretary, Dave Oliver, says Texas Pacific has "form" on leveraged buyouts.
He points to a "meticulously planned assault" on union members after it bought UK cater, Gate Gourmet, in 2002.
It initiated mass sacking at Heathrow Airport and brought in contract workers on vastly inferior wages and conditions. The exercise slashed 3000 jobs.
"There should be a national interest test," Oliver says.
"Qantas doesn't just employ tens of thousands of Australian workers. It provides crucial services for regional Australia, trains hundreds of apprentices and does defence work.
"Australia can't afford to put those things at risk.
"It appears they have inflated the price to get the deal through and they will want to recoup their money from jobs and services.
"At this point, the only definite winners are the directors who gave the go-ahead and will take multi-million bonuses for themselves."
Qantas unions are calling on the Treasurer, Peter Costello, to use his statutory power to impose stringent conditions on the takeover.
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