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December 6, 2013 5:54 am
Qantas, Tim Tams, Vegemite and Victoria Bitter are all Australian national treasures. Three are foreign owned and thriving. One was just downgraded to junk following the damage inflicted by a foreign-owned rival. Australians must get over the idea that Qantas is better off without the option of foreign funds.
Tim Tams, the chocolate biscuit treasured by many outside Australia as well as in, became technically American when its maker Arnott’s was bought by Campbell’s Soup in the 1990s. Kraft Foods has been making Vegemite since the 1930s. VB succumbed in 2011 when Fosters went to SABMiller. All three are still certifiably Australian. Yet foreigners cannot own more than 49 per cent of Qantas and foreign airlines cannot go beyond 35 per cent. Virgin Australia, meanwhile, is majority owned by Virgin, Etihad, Air NZ and Singapore Air . The speed of Standard & Poor’s downgrade underlines the depth of Qantas’s problems even more than this week’s warning of a big first-half loss. S&P dropped the airline from triple-B minus with a stable outlook to double-B plus with a negative outlook. Direct downgrades from stable outlooks are rare. Call it the rating equivalent of not passing go and going directly to jail.
Virgin’s foreign funding advantage is unfair, although even Qantas fans cannot miss the irony in its protests of unfair competition when its home success was built on it being unfair to competitors. Its plans for capacity expansion in 2001 as its collapsed rival, Ansett, tried to revive itself mimic Virgin’s tactics today. The problem is that Qantas relies on profits from a two-thirds share of its lucrative home market to cover its lossmaking international business.
Australians are not alone in protectiveness – Britons were upset about Kraft buying Cadbury, the chocolate-maker. But perceptions of Cadbury and Vegemite are no less British and Aussie now than they were before Kraft. Any foreign owner of Qantas would, to use the local lingo, have a couple of ’roos loose in their top paddock if they thought that making the airline feel less like the spirit of Australia would be good for business. Time to free this flying ’roo so it can fight back before it stops being a treasure altogether.
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