It’s no coincidence that the Qantas takeover happens just as Virgin Blue predicts a 40% rise in its profit and another major step looks like being made in rationalising the international aviation industry with United and Continental in merger talks. The MacQanTexasCoe team is making a large bet on the future of aviation looking rosy.

And it does look a lot better right now than it for a very long time. IATA says the total industry would have actually been profitable last year if not for US restructuring costs. Around the world, governments are increasingly rational in the way they look at aviation. The “national flag carrier” decreasingly represents the national ego.

The happy development of the local duopoly is of course crucial to the successful funding of the new highly-geared Qantas – and neither Virgin Blue nor Qantas has said anything this year to cast any doubt on that. Both can make good livings out of not trying to cut each other’s throats with competition. Of course, consumers pay for that.

The dogs are already barking that the Bruce Bairds of federal parliament won’t be bending over backwards to protect Qantas once it’s a private equity machine – but you can rely on Geoff Dixon to continue to lobby the government with the now-usual implied but never specified threat of losing routes. It won’t work nearly as well as it used to.

And the big winner? Macquarie Bank, with all those very fat fees from the deal and safely reduced exposure to the equity. There’s also a suggestion that MacBank is lining up for a greater role in some of the Qantas fleet leasing business – which just might require some deal-doing with David Coe’s AFG which is already involved. Yes, there are potential conflicts among the partners – a dangerous thing when making big bets together.

Peter Fray

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