Qantas Airways has decided to abandon its proposed A$611 million ($387 million) acquisition of charter flight operator Alliance Aviation Services, according to a joint statement released by the companies on Thursday.
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This decision comes several months after the Australian Competition and Consumer Commission (ACCC) blocked the deal in April, citing concerns about potential price increases and a decline in service quality. The deal was originally proposed in May 2022. Tim Waterer, chief market analyst at KCM Trade, noted that the ACCC’s opposition made the takeover attempt challenging.
Following the announcement, Qantas shares dropped 2.7% to A$4.7 in early trading, while Alliance’s shares fell by approximately 1%. Despite the ACCC’s concerns, both companies maintained that the acquisition would have enhanced customer value without adversely impacting competition in the resources sector. However, they acknowledged that there is currently no viable way forward for the deal. Kyle Rodda, senior market analyst at Capital.com, suggested that Qantas deemed the acquisition more trouble than it was worth, particularly after the ACCC’s rejection in April.
He also mentioned that Qantas is grappling with a brand crisis partly linked to perceptions of anti-competitive behavior. Despite this setback, Qantas will retain a nearly 20% stake in Alliance and will continue to exercise options over four additional aircraft under its existing agreement with the charter operator, reducing the total number of E190s operated by Alliance for Qantas to 26. The statement also noted that Qantas is not alone in its efforts to expand charter services, with Regional Express Holdings acquiring charter operator National Jet Express in July 2022.
