Qantas share price on watch after big merger plan dies

The airline just can't shake off its bad fortunes. Here's the latest blow that investors will be watching on Thursday.

| More on:
Man sitting in a plane looking through a window and working on a laptop.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

As if fortunes for the Qantas Airways Limited (ASX: QAN) share price couldn't get any worse, the airline revealed yet more bad news on Thursday morning.

Back in May 2022, Qantas agreed to acquire charter airline and wet lease provider Alliance Aviation Services Ltd (ASX: AQZ).

However, that proposal met a major hurdle in April when the Australian Competition and Consumer Commission announced it would reject the deal due to dilution of competition concerns.

It seems that ended up a fatal blow, as both airlines stated on Thursday morning that the merger has now been abandoned.

Both the Alliance Aviation and Qantas share price will be keenly watched by investors on Thursday morning.

Why the takeover was on the nose

The problem was that both airlines provide charter services to fly mining workers in and out of remote areas in Western Australia and Queensland.

"Qantas and Alliance currently strongly compete with each other in markets where there are few effective alternatives," ACCC chair Gina Cass-Gottlieb said back in April.

"Flying workers in the resource industry to and from their worksites is an essential service for this important part of the Australian economy, so it is critical that competition in this market is protected."

In a statement to the ASX, both airlines disagreed that the merger would have reduced competition and indeed would have "created customer value".

"However, both companies acknowledge that there is no reasonable path forward for the deal at present," the announcement read.

"Qantas will continue to serve the growing resources sector through its existing charter operations. It currently has around 27% of the total charter market."

Qantas and Alliance alliance will continue

Qantas holds 20% of Alliance shares, which will be retained.

The long-term agreement for Alliance to operate up to 30 E190 aircrafts on behalf of Qantas will also continue.

Four more E190s will join the fleet from April.

"Alliance is an important partner for the Qantas Group and the E190s have helped us open new routes across Australia," said Qantas Associated Airlines and Services group executive John Gissing.

"These four new aircraft will provide additional capacity and connectivity in the domestic market."

Qantas shares have plunged 27.4% since 24 July on the back of multiple governance and customer relations scandals.

The annual general meeting will be held on 3 November in Melbourne, where shareholders are expected to protest at the board's performance.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Alliance Aviation Services. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Mergers & Acquisitions

A woman sits with a glass of milk in front of her as she puts a finger to the side of her face as though in thought while her eyes look to the side as though she is contemplating something.
Mergers & Acquisitions

Coles share price falls despite ACCC acquisition approval

Coles' $105 million dairy acquisition has been approved by the ACCC.

Read more »

Worker inspecting oil and gas pipeline.
Mergers & Acquisitions

Origin Energy share price tumbles on 'incomplete complex' revised takeover offer

Origin Energy shareholders will get to cast their votes on the contentious takeover proposal on Monday.

Read more »

Two CEOs shaking hands on a deal.
Mergers & Acquisitions

Wesfarmers share price rises amid latest acquisition news

The company has completed its latest acquisition.

Read more »

Close-up of a smiling man holding a jar containing nuggets of gold.

Guess which little-known explorer this ASX 200 gold stock is buying up

The junior ASX gold explorer has a promising pre-development project in Tanzania.

Read more »

A girl wearing a homemade rocket launches through the stars.
Small Cap Shares

Guess which ASX small-cap share is rocketing 24% after rejecting a takeover offer

This online beauty retailer is in the sights of a UK rival.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Energy Shares

Why you should vote your Origin shares in favour of its takeover

Brookfield believes investors should be accepting the offer that's on the table.

Read more »

A woman crosses her hands in front of her body in a defensive stance indicating a trading halt.
Energy Shares

Own Origin shares? Why you should vote against its takeover

AustralianSuper says investors should say no to a takeover.

Read more »

A young man stands facing the camera and scratching his head with the other hand held upwards wondering if he should buy Whitehaven Coal shares
Energy Shares

Origin Energy shares on watch amid takeover chaos

There has been a new twist in the Origin Energy takeover.

Read more »