After the AFR provided all the detail on the MacBank/Texas Pacific takeover bid for Qantas this morning, the airline had little choice but to confirm the approach, albeit with few words.

“The approach is confidential and incomplete and is being investigated by Qantas,” said the stock exchange announcements – which probably is confirmation of the earlier rumour (Crikey, 8 November) that Qantas was letting a player in to peruse its books.

Qantas also said it had undertaken discussions over a period of years with a range of individuals and companies on possible partnerships, joint ventures and acquisitions.

Well they certainly have – including talks that came to nought with Macquarie Bank and the Packers back in 2001.

But MacBank didn’t go away and one might now wonder how much of its passing interest in Patrick Corp might have been to do with Virgin Blue if it has developed a fondness for sniffing avgas.

Although it missed out there, Virgin Blue remains an important part of making sense of the Qantas takeover. Indeed, it only makes sense if the increasingly cosy domestic duopoly stays in place – heaven forbid any outbreak of single competition again.

And the second leg to that is continuing to keep Singapore Airlines off the Oz-USA route – the major source of the Roo’s international revenue.

Then there’s the question of why Texas Pacific Group would be interested. It had a look at Ansett and walked away and it’s invested in turnaround airline propositions in the US before, but Qantas would seem to be a somewhat different proposition.

Qantas shares were scraping $3 just three months ago. It looks like there was indeed more than oil prices at play in the nice rally up to yesterday’s close of $4.35. At the $3 level, you can see the likes of Texas Pacific being interested in the fat dividend it’s been paying, but at $5.20, the PE ratio is a much more expensive 21.

And then there’s the management team with the reported offer of 1% on the table for them – but, hey, that’s only $100 million. Still, it wouldn’t be a bad retirement present for Geoff Dixon.

Could that have been the carrot that’s kept him in the cockpit for so long and succession planning that could leave something to be desired?

Peter Fray

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Peter Fray
Editor-in-chief of Crikey