Qantas scraps plan to buy Alliance Aviation amid regulatory hurdle

By Rishav Chatterjee

(Reuters) – Qantas Airways will drop its A$611 million ($387 million) plan to buy out charter flight operator Alliance Aviation Services, the companies said on Thursday, months after Australia’s competition regulator blocked the deal.

The Australian Competition and Consumer Commission (ACCC) had in April denied authorisation for the acquisition, saying the deal was likely to push prices up and service quality down.

The companies had entered into the deal in May 2022.

“The attempted takeover of Alliance was never going to be an easy endeavour given the stance of the ACCC on the matter,” said Tim Waterer, chief market analyst at KCM Trade.

Qantas shares fell 2.7% to A$4.7 in early trade, whereas Alliance shed around 1%.

The two companies, however, believe the buyout would have beefed up customer value without negatively affecting competition in the resources sector, they said in a joint statement on Thursday.

However, “there is no reasonable path forward for the deal at present,” the companies said.

“Qantas has decided that the acquisition is more trouble than it’s worth, especially after the ACCC struck down the deal back in April,” said Kyle Rodda, senior market analyst at Capital.com.

He added that Qantas is dealing with a brand crisis, a part of which is tied to perceptions that the company acts anti-competitively.

The country’s flag carrier, which will retain a near 20% stake in Alliance, agreed to exercise options over four additional aircraft under its long-standing deal with the charter operator, bringing down the total number of E190s operated by Alliance for Qantas to 26.

Qantas is not the only airline that is aiming to expand charter service offerings with smaller peer Regional Express Holdings buying charter operator National Jet Express in July 2022.

($1 = 1.5785 Australian dollars)