Qantas says no takeover bid, conditions challenging

SYDNEY (Reuters) - Qantas Airways (QAN.AX) sought to play down talk of a takeover bid on Wednesday as it focuses on expanding in Asia and taming labor unrest over its plans to slash jobs in Australia.

The Australian government said it was determined that majority ownership of the country's flagship airline should not fall into foreign hands after speculation resurfaced that private equity firms may be circling the company.

The takeover speculation, triggered by a newspaper report and after Qantas shares hit near-record lows this week, came as Qantas reported its full-year net profit more than doubled, but warned market conditions were volatile and challenging.

"As far as we are concerned, there is no formal or informal bid on the table and no one has approached us, so we can only regard it as speculation," Alan Joyce, the airline's chief executive, told reporters at the airline's profit briefing.

He was responding to a report in The Australian newspaper that said the issue had been discussed at senior levels of government, with both the transport minister and treasurer inclined to oppose any private-equity bid.

The government did not confirm the report, but said it was determined to keep majority ownership in Australian hands.

"The Australian government's position is very firm. We are determined to ensure that Qantas stays as a majority-owned Australian airline, one that is able to operate effectively," Transport Minister Anthony Albanese told reporters on Wednesday.

Foreign ownership of Qantas is capped at 49 percent under the Qantas Sale Act. The airline was almost acquired by a consortium of local and offshore private equity firms and other bidders in 2007, but shareholders narrowly defeated the proposal.

Some investment bankers played down the idea of a bid.

"Look at their debt. There is no way a private equity firm could get up the money. After what happened last time why would you bother?" one source familiar with the industry told Reuters.

SHARES NEAR RECORD LOWS THIS WEEK

Qantas, whose full-year earnings were in line with forecasts, warned it faced challenging conditions in 2012 as it battles labor unrest, higher fuel prices and losses at its international operations.

The airline's shares touched a near record low this week, prompting speculation the company was ripe for a takeover. The stock jumped 3.9 percent when it opened on Wednesday but gains quickly fizzled after the denial of any bid approach.

In morning trade, the stock stood at A$1.53, down 0.3 percent and underperforming the wider market .AXJO.

Qantas official said they could not give earnings guidance for the year ahead.

Pre-tax profit was A$552 million($578.7 million) for the year ended June 30, in line with the airline's forecast in June of between A$500 million and A$550 million. The bottom line jumped to A$250 million from A$112 million a year earlier.

Qantas last week announced plans to set up two new airlines in Asia, cut 1,000 jobs and order $9 billion of new Airbus (EAD.PA) aircraft as part of a makeover to salvage its loss-making international business.

Qantas's international operations posted a pre-tax loss of A$200 million. The result included a A$136 million impact from flooding and a cyclone in Queensland state, Japan's tsunami, an earthquake in New Zealand and a Chilean volcano eruption.

The airline said fuel costs were expected to increase by about A$500 million in the first-half, while there were plans to increase capacity in that period by 8 percent. Yields were expected to be higher in the first half of 2012 compared to a year earlier.

Qantas faces growing pressure from pilots, aircraft engineers and other workers threatening strike actions over the job cuts and its other attempts to cut costs, which are soaring.

Qantas shares touched a two-and-a-half year low of A$1.42 on Monday, almost matching a March 2009 record low of A$1.41.

($1 = 0.954 Australian dollars)

(Additional reporting by Rob Taylor in CANBERRA; Editing by Mark Bendeich, Ed Davies and Matt Driskill)