Qantas Sells Back Sydney Airport Terminal Lease for AUS$535M
19th Aug 2015
In an attempt to free up some of its capital, Australian airline company Qantas Airways has sold the lease to its Sydney domestic terminal back to the airport operator. The price of this deal is reported to be 535 million Australian dollars, or 394 million US dollars.
Commenting on the sale, chairman of Strategic Aviation Solutions Neil Hansford said:
"They are working very hard at retiring debt to get their credit rating up while proceeding to buy new aircrafts to reduce the age of their fleet. So, if they can turn some assets like the terminal into cash, it then puts them in a much better position."
A similar fate is probably awaiting Qantas' terminals at Perth and Melbourne, as the carrier has begun talks with airport operators there as well. This Tuesday, Qantas CEO Alan Joyce said the talks were in early stages.
Qantas expects to record a profit of AUS$210 million in the next fiscal year thanks to selling the terminal lease back to Sydney Airport.
"This has strengthened the cash position and the capital position of the group."
In February, 2014, Qantas has also sold its lease over Brisbane Terminal for AUS$112 million.
The Australian carrier has bought a 30-year lease on Sydney Airport's Terminal 3 back in 1989. According to the initial deal, the facility the airport was to get back the facility four years from now, in 2019.
Some analysts, such as Tony Webber of Webber Quantitative Consulting, are not entirely convinced the move to sell the Sydney terminal lease was necessary at this point, given the fact Qantas' fortunes are improving.
Former Qantas chief economist said:
"They don't need the cash. In my mind it's madness to sell an asset to a monopoly operator. It just gives them more power, and the ability to increase fees in the future."
Also, as of 1st September, Qantas will include a passenger fee for flights arriving at this terminal.