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Govt approves Qantas takeover -

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Govt approves Qantas takeover

Broadcast: 06/03/2007

Reporter: Tom Iggulden

The Federal Government has approved the $11 billion private equity buyout of Qantas.

Transcript

TONY JONES, PRESENTER: The sale of Qantas is now almost certain to go ahead after the Government
announced it would not oppose a bid for the company from a private equity consortium. The Foreign
Investment Review Board has attached strict conditions to the sale but if it happens it will be
despite the objections of Qantas employees and the Treasurer's own misgivings about the amount of
debt used to finance the deal.

TOM IGGULDEN: An announcement about the sale of Qantas wasn't expected until tomorrow but the
Treasurer moved it forward to late this afternoon. He moved just as swiftly to make assurances that
the flying kangaroo will be staying where it is.

PETER COSTELLO: Foreign control of Qantas will not occur. A majority of directors of Qantas must be
Australian citizens and Qantas must remain based in Australia.

TOM IGGULDEN: The Treasurer, backed by the Transport Minister, Mark Vaile, said the consortium
bidding for Qantas had agreed to extensive conditions designed to keep Qantas Australian.

PETER COSTELLO: As far as anything I've seen come through foreign investment, this is the most
extensive I've ever seen.

TOM IGGULDEN: It's understood the conditions won't be enough to change the generous $5.60 a share
offer from the consortium bidding for the airline led by Macquarie Bank.

FABIAN BABION, BBY STOCKBROKERS: On our understanding and assessment, those conditions would not be
a major detractor of value to the bid, to the consortium and therefore, you know, all in all one
would imagine they'd be celebrating this evening.

TOM IGGULDEN: But others aren't.

BILL SHORTEN, AUSTRALIAN WORKERS UNION: It looks like big business had had a win and jobs, jobs,
jobs - well there's just no guarantees for them. I think I would see tougher deeds drafted by the
under-12s footy team.

TOM IGGULDEN: Qantas has been reviewing its maintenance operations even as the deal's been
negotiated and workers are worried their jobs will be sent offshore. A condition on the sale says
Qantas' operations in aggregate must be based in Australia and the Treasurer offered this
assurance.

PETER COSTELLO: The current review of maintenance repair and overhaul operations will continue with
a view to building on existing capabilities for wide and narrow bodied maintenance to create an
onshore, globally competitive, inhouse maintenance repair and overhaul operation.

BILL SHORTEN, AUSTRALIAN WORKERS UNION: Unlike Peter Costello, I've been involved in the review.
The review makes no guarantees about the 737 narrow body maintenance being done at Tullamarine. Now
if it all works out, we could keep the work at Tulla, but if it doesn't, this work could be done in
Beijing or Budapest.

TOM IGGULDEN: The deal is also being opposed by Qantas' pilots.

PETER SOMERVILLE, AUSTRALIAN AND INTERNATIONAL PILOTS ASSOCIATION: There are still many
uncertainties in regard to this deal and the Government has done more to shepherd it through, line
up with big business than give it the scrutiny the Australian public and the 38,000 employees of
Qantas deserve.

TOM IGGULDEN: But the Opposition still building bridges to the business community isn't kicking up
a fuss.

WAYNE SWAN, SHADOW TREASURER: Labor is not inclined to oppose the bid proceeding but we want to
take our time.

TOM IGGULDEN: Ironically, it's the Treasurer himself who's voiced some of the strongest opposition
to the $11 billion sale which is highly geared and financed mostly offshore. In a speech just
yesterday, the Treasurer warned that such deals made companies sensitive to international shocks
and market downturns and he recalled the 80s when many investors were burnt by high offshore
levels. Today he was backing off.

PETER COSTELLO: I have voiced policy in relation to the macro economic effect of gearing levels,
particularly if it were widespread throughout the economy.

TOM IGGULDEN: The market will make its decision on the deal when trading opens tomorrow.