Never mind all the other Qantas headlines, the market verdict on the likely profitability of the “Noo Roo” is being spelled out in the plunging Allco Equity Partners share price.

As we’ve mentioned several times before, AEP – chaired by David Coe, run by Peter Yates – has been a dog pretty much from day one, the sort of cash box that gives private equity a bad name as it failed to land deals and effectively sat on the sidelines playing with or by itself during one of the great equity booms of history.

Now, after a couple of years of dithering and missing, Coe and Yates are betting the company on the Qantas deal and the market doesn’t like their decision. As I write, AEP is down another 25 cents to $3.85 and looking weak at that. The stock hasn’t been anywhere near its IPO cost, but the fall from its $4.50 high has said plenty about the lack of faith in this bet.

Oh well, at least the boys running the thing stand to make millions from the management fees.

Meanwhile, back among the headlines, the Qantas hysteria seems to be gathering pace and breaking out in the strangest places, including in the writing of my esteemed colleague S. Mayne who yesterday sounded rather National Party in wanting special conditions placed on the Qantas bidders concerning regional routes. It’s a step away from keeping the single desk for wheat exports.

“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?” asked Stephen. Well, the already-privatised Qantas flies those routes because it makes a good profit out of the Qantas-Link business. You’re lucky to even get a seat to Karratha.

Amidst all the hare-chasing, it’s Terry McCrann who provides a steadier voice. No, the sky is not falling. And neither’s the Roo, at least not yet.

Peter Fray

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