Qantas in battle for FIFO control
QANTAS’ turbulent week continues with news it intends to buy a major fly-in, fly-out airline and, in the process, kick off a fresh fight with the consumer watchdog.
Fresh from losing a legal battle over worker outsourcing, the national carrier on Thursday announced a plan to acquire the remaining 80 per cent stake it does not already own in Alliance Aviation.
It comes a month after the Australian Competition and Consumer Commission (ACCC) finished investigating the minority stake Qantas bought in Alliance in 2019.
The commission had been investigating the Qantas-Alliance deal for three years because of fears the deal would hurt competition in the FIFO space.
Alliance, which has 70 planes and is based out of Brisbane, was both a direct competitor to Qantas and also operated flights for Virgin Australia.
Qantas on Thursday noted the ACCC investigation made no findings that its stake in Alliance lessened competition.
The carrier is now moving to acquire the rest of Alliance in a scrip deal that values the charter firm close to $1bn on an enterprise value.
Qantas Group boss Alan Joyce said acquiring the remaining shares in Alliance would allow QantasLink to compete in the highly competitive charter segment, particularly given the shared fleet type of Fokker aircraft.
“Keeping these aircraft operating reliably for longer than either carrier could achieve by themselves will help keep costs down, which is ultimately good news for charter customers,” Mr Joyce said.
“The resources sector continues to grow and any new tender for airline services will be very competitive. It makes a lot of sense for us to combine with Alliance to improve the services we can offer, which is a positive for both airlines as well as the travelling public.”
Qantas said it had notified the ACCC of the proposed deal. The regulator will need to approve the purchase, as will Alliance Aviation shareholders.
Qantas on Wednesday failed in its bid to convince the Federal Court it did not act illegally when it outsourced more than 1600 ground crew staff during the pandemic.
The airline faces financial penalties for its decision to sack baggage handlers, ramp workers and cabin cleaners in late 2020 and instead use the labour hire services of thirdparty contractors.
Qantas says it will now take its legal fight to the High Court.
The Transport Workers’ Union launched legal proceedings in the Federal Court against the airline over the outsourcing decision and won a partial victory in July 2021.