With the deal done to sell Qantas to Airline Partners Australia for $11.1 billion — $5.60 a share – just what is this curious MacQanTexasCoe beast that will soon own “our” Flying Roo? For a start, there’s a predictable difference between voting and economic interests in the airline, but the question of real control goes beyond the mere numbers.

The easy answer is that it won’t be MacRoo. The Millionaire Factory has done very nicely by playing a major role in getting the deal flying and then stepping back from the front line while pocketing $400 million or more in fees. That’s why it’s called the Millionaire Factory. MacBank also would have too big a conflict of interest in owning Sydney Airport.

The APA statement to the exchange shows MacBank having voting and economic interests of “less than” 15% – and I’d bet that will be reduced one way or the other.

Which leaves the two real players – the Davids Coe and Bonderman of Allco and Texas Pacific Group respectively. Respectively again, one has expertise in leasing aircraft, while the other is the full box-and-dice turnaround investor with expertise in several airlines and other aspects of the travel industry. It’s an important difference.

The public pronouncements as this takeover unfolded indicated Coe came late to the party, knocking on the door and asking to come in, but he’s turned up in force with both Allco Finance Group and Allco Equity Partners in tow. AFG is up for 8% of the money but 11% of the voting rights while AEP is putting up 27% of the cash for 35% of the votes – it’s the same foreign equity swifty CanWest pioneered with Channel 10 a decade ago.

TPG provides 25% of the money for “less than” 15% of the votes, Canada’s Onex has 12.5% economic interest and 9% voting interest, unspecified other foreign investors cough up 11.5% of the money for “less than” 15% of the votes and Qantas senior management has no votes but 1% of the money for turning up to do their job.

Allco Equity Partners then is the biggest shareholder both in votes and economic interest – and what a curious little cash box AEP is. David Coe is chairman with ex-MacBank and ex-PBL CEO Peter Yates as managing director. AEP has not exactly set the world on fire with its performance, missing more often than it’s hit in takeovers. Think Wattyl, think Baycorp, think dog. The shares cost $6 over three instalments and were worth $4.37 this morning.

Does anyone think for a moment that the under-performing Yates is suddenly calling the shots at Qantas? No.

AFG though has been very busily building up its aircraft leasing expertise as well as raising capital. As the AFR reported yesterday:

Allco owns 22 of the aircraft that Qantas leases (which represents about 50% of the airline’s leased portfolio) and the company has signalled an ambition to expand rapidly in the sector. It has aircraft-leasing executives based in Sydney, Singapore, London, San Francisco, Frankfurt and Hong Kong.

In June this year it appointed as directors two of the world’s more experienced airline executives, former British Airways and Cathay Pacific chief executive Rod Eddington and his friend and successor as Cathay Pacific chief executive, David Turnbull. They joined former Ansett Worldwide Services chief Barbara Ward on the board.

But there’s a big difference though between leasing aircraft and profitably running an airline. Which is where David Bonderman’s TPG has the upper hand.

TPG’s turnaround of Continental really made the firm’s reputation as a successful catcher of falling knives. Airlines and travel investment are an on-going part of the Texan’s portfolio. Bonderman is chairman of Ryanair, has just bought Sabre and is also on the record as wanting to invest more in the Asian region, decreasing the percentage put into North America and Europe.

To keep the law happy, David Coe’s outfits might be the Australian face of MacQanTexasCoe, making the announcements to the passengers once up in the air, but I’d bet the silent pilot would be American with Geoff Dixon the head steward.

And the early indications are that Coe will be operating through his AFG deputy-chairman, the sacked Telstra chairman Bob Mansfield. His name is on the consortium’s media release.

There’s a tip though that former Cathay Pacific boss David Turnbull might end up doing more than just serving as a Qantas director. Some aviation types think he might well take Geoff Dixon’s job a little bit further down the track.

There should be interesting days ahead in the Qantas boardroom. The Flying Roo saga isn’t over, it’s just starting another leg of a long journey.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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