Qantas, the Australian airline, has had its shares placed in a trading hold ahead of a “material announcement in relation to capital management initiatives”.
The company refused to elaborate although the airline’s board is understood to be meeting later on Tuesday to consider new capital management plans.
It comes as a growing number of Australian companies issue shares to pay down debt and bolster their balance sheets.
However, in a November update to the market Qantas highlighted its “strong liquidity” position with A$2.5bn ($1.6bn) of cash. It said then that it had more than A$1bn of underwritten financing facilities although a further A$1bn was “mandated and nearing completion”.
Qantas last year held discussions with British Airways about a ”merger of equals”, however the talks failed after the two sides were unable to reach agreement on which party would hold a majority share of the two airlines’ combined equity.
Qantas was forced to alert the public of the new capital management plans after it was queried by the Australian Stock Exchange following a fall in its share price from A$2.49 on Friday to A$2.29 in early trading on Tuesday.
However, Qantas said there was no reason to update the market on its earnings guidance for 2008-09 provided last year.
Qantas warned in November that full-year profits could fall by nearly two-thirds to A$500m as the global credit crisis hit the airline’s core business travel market.
At the time the airline said weaker demand meant profits in the year ending in June would fall to A$500m from A$1.4bn a year earlier, compared with some analysts’ estimates of about A$750m.
The airline had earlier announced 1,500 job cuts and abandoned plans to increase capacity.
Qantas said its shares would remain in a trading halt until it makes an announcement, “which is anticipated” before the ASX opens on Thursday morning.
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