Qantas tipped to unveil plans on Star Track Express


Qantas expected to announce plans for Star Track Express and Australian Air Express, amid claims the entities will be merged

By Ruza Zivkusic | October 27, 2010

Qantas is expected to this week announce its plans for Star Track Express and Australian Air Express, with one analyst believing both entities will be merged.

It is understood an announcement of a possible merger will be made during Quantas’ annual general meeting, Commonwealth Bank analyst Matt Crowe says.

Australia Post joined Qantas earlier in announcing a review of their joint venture investments in Star Track Express and Australian Air Express, aiming to "improve their value", Australia Post spokeswoman Lanie Harris says.

The ongoing review is set to lead towards a full merger, Crowe believes.

"It looks like it will fold through into a full merger; the two companies have been looking to address the underperformance of these businesses for a long time and they don’t really seem to be getting anywhere," Crowe says.

"I think Star Track Express is worse off because the expectations of them were very high when they were sold and they probably haven’t delivered to those expectations where Australian Air Express’ expectations were probably lower."

He believes the joint venture arrangement "hasn’t really worked".

"Perhaps the two owners may have different plans or strategies; there doesn’t seem to be an agreement on how to run these businesses," Crowe says.

He hopes any merger will lead to a clearer role for the entities, and has questioned why Star Track and Air Express have not been merged. He believes Australia Post is opposing attempts to join the businesses.

"Why they haven’t merged earlier is something a few of us would like to know. We’re suspicious that the partners have had different agreements, the merger seems to be coming from Qantas and Australia Post has been less likely to travel down that road," Crowe says.

"In the freight industry, a lot of the companies that are successful today have become successful by merging or acquiring others by operating at lower costs at extended reach, the industry has a history of benefiting from consolidation."

Harris says she is not prepared to comment until the review is completed.

However, she says Australia Post is committed to the businesses and the value they represent.

Australia Post achieved a $103 million profit despite challenging conditions last financial year and recorded an underlying pre-tax profit of $235 million.

The figure includes a $150 million provision for business restructuring and voluntary redundancy costs.

ATN has sought comment from Qantas.


You can also follow our updates by joining our LinkedIn group or liking us on Facebook