A view shows the last Qantas Boeing 747 jumbo jet that departed from Sydney Airport, as Qantas prepares to retire its remaining Boeing 747 planes early due to the coronavirus disease outbreak, in Sydney, Australia, July 22, 2020. REUTERS/Stephen Coates - RC27YH9PDI0Eshareholders can breathe a little easier. After stonewalling its suitor for a couple of months, the board is finally preparing to open the books to a group led by IFM Investors.
Extended lockdowns in Australia’s two most populous states, New South Wales and Victoria, have delayed recovery in travel since the first entreaty. Analysts slashed their average forecast for the Australian airport operator’s earnings before interest and tax by about a fifth over the span, according to estimates tracked on Eikon.
The buying consortium, which also includes Australian pension funds, is in better position to be patient. According to Breakingviews calculations, a nearly 12% internal rate of return would be theoretically feasible in roughly six years if EBITDA rebounds strongly and then slows to its historical growth rate of about 7% while 30% of cashflow is used to pay down debt.
- Under terms of the revised proposal, the so-called Sydney Aviation Alliance would pay A$8.75 a share, up from its previous offer of A$8.45. Its original offer of A$8.25 was disclosed on July 5. - The bidding consortium includes IFM Investors and U.S.-based Global Infrastructure Partners, as well as Australian pension funds QSuper and AustralianSuper.Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day.
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