The private equity takeover of Qantas is far more than just another takeover deal. This transaction is the most politically sensitive corporate decision the Howard government has faced.

Should the Government step in on the grounds of foreign ownership or competition, given that Qantas is an Aussie icon and Macquarie Bank already controls half of Sydney Airport? The ACCC and Peter Costello are making noises, but the PM has indicated the $20 billion deal, including debt and liabilities, is likely to go through.

But surely there will have to be a range of conditions and undertakings covering issues such as the airline’s commitment to regional routes.

Will a privatised Qantas continue to service Charleville, Armidale, Bundaberg, Dubbo, Longreach, Mildura, Moree, Roma, Narrabri and Karratha if the expected profits don’t flow and the $1 billion interest bill proves too much?

And what about the 4600 Australian engineers employed by Qantas? CEO Geoff Dixon has long threatened to shift some of these jobs offshore, but what would this mean for their large and sensitive defence contracts? Even General Peter Cosgrove is on the existing Qantas board.

Industrial relations will be front and central in the forthcoming federal election. There’s every chance that Qantas will feature strongly and the government certainly won’t want the private equity owners to do anything drastic before polling day.

Qantas has always had enormous lobbying clout with the government, but that doesn’t mean heavy government protection, such as banning Singapore Airlines from the Pacific route, will continue. And if relations get tense, will Qantas continue to deluge our politicians with perks?

So could the government actually stop the deal from proceeding by imposing onerous conditions? The only major deal blocked by the Howard government was Shell’s bid for Woodside in 2001, which in hindsight was a great move for the nation.

Macquarie Bank is acutely aware of the political sensitivities and has hired the PM’s ocker mate Bob Mansfield, the former chairman of Telstra, to front the bid.

He’ll need to perform the job with great diplomacy to put an acceptable face on the so-called private equity barbarians who are seizing Australia’s best known global brand.

Peter Fray

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