Qantas Airways (ASX:QAN) could see billions flow into its coffers, as it looks to sell of non-core assets.
Analysts have suggest the 'Flying Kangaroo' is set to sell off its long-term leases on passenger terminals at four airports, including Sydney and Melbourne, according to the Australian Financial Review (AFR). Those assets alone are estimated to be worth as much as $1 billion, with Sydney Airport (ASX:SYD) a potential keen bidder for Qantas' Sydney terminal.
Late last year, Qantas sold out its 50% share in courier business Star Track Express to partner Australia Post, and assumed full control of freight business Australian Air Express. The AFR has also reported that Qantas is looking to sell off its defence services division, which provides maintenance and support to the Australian Defence Force.
Chief executive Alan Joyce has already offloaded the catering and maintenance operations to pay down debt. While the sale of the defence division is likely to realise $80 to $100 million, it wouldn't make much of a dent in the company's net debt, which stood at $3.4 billion at the end of December 2012. However, sales of other non-core assets could add up to a substantial sum.
Qantas also holds a 29% stake in Jetset Travelworld (ASX:JET) that is currently worth around $50 million, but no mention has been made by Qantas so far regarding this asset. The company could also seek partners or co-investors in its Jetstar Asia businesses, after China Eastern took a stake in Jetstar Hong Kong.
Qantas has undergone a major upheaval in its business since Alan Joyce took the reins. Much of the moves have been focused on the international division, which has been unprofitable for some years now. An alliance with Emirates was forged, which has taken much of the pressure off the international division, allowing Qantas to focus on Asian and American routes, as well as its domestic business.
Foolish takeaway
Mr Joyce has done an admirable job in attempting to turnaround Qantas' fortunes, but airlines are tough businesses with many factors outside of management's control. The current issue is likely to be the falling Australian dollar, which will push up the company's already substantial fuel bill, and it seems only a matter of time before management have to turn their attention to another bush fire.
In the market for high yielding ASX shares? Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!
More reading
- Is it time to buy Qantas?
- Three reasons the falling Aussie dollar is GOOD news
- Should you buy shares today?
- Cheering the end of QE
Motley Fool writer/analyst Mike King owns shares in Sydney Airport.
