Qantas slides as stakes sold down

Shares in Qantas Airways, Australia's biggest airline, fell to a three-month low yesterday after unidentified shareholders sold at least 2 per cent of the stock in block trades on the Australian Stock Exchange.

Qantas shares fell as much as 1.3 per cent to A$3.67, the lowest since December 9.

Up to 43 million shares, or 2.3 per cent of the airline's stock, were transacted in block trades at between A$3.66 and A$3.70 each yesterday, according to Bloomberg data.

"I think it is the Singaporeans," said Paul Trainor, chief investment officer at Direct Portfolio Services in Sydney. "These guys are readjusting their portfolios."

Temasek Holdings, the Singapore Government's investment unit, may have sold its Qantas stake, in a transaction arranged by UBS, the Australian Financial Review said, without saying where it got the information.

UBS spokeswoman Caroline Gurney and Temasek's spokeswoman Eva Ho declined to comment.

The sale follows Qantas' deteriorating relations with Singapore Airlines, 56.5 per cent owned by Temasek, the AFR said.

Singapore Airlines, Asia's most profitable and largest carrier by value, was denied permission to fly to the US from Australia by the Australian Government last month, in a move that shields Qantas from competition on the profitable route.

Australian Transport Minister Warren Truss, who urged Qantas and Singapore Air to merge, wasn't immediately available for comment.

At least five block trades of Qantas shares were done as of 1.28pm yesterday, with up to 43.7 million shares, or 2.3 per cent of the airline's stock, changing hands, according to Bloomberg data. The shares were sold at between A$3.66 and A$3.70 each, valuing the total transactions at almost A$160 million.

The sale is "certainly not going to affect the underlying Qantas business," said Trainor.

On the ASX, 90 million Qantas shares were traded, making it the most active stock on the bourse.

It's the biggest block of Qantas stock traded since British Airways, Europe's third-largest airline, sold its entire 18 per cent holding in September 2004, Bloomberg data show.

Qantas shares have fallen 8.2 per cent this year, the fourth-biggest decliner in the 10-stock Bloomberg Asia-Pacific Airlines Index. The airline's first-half profit fell almost 10 per cent to A$352.6 million ($405 million) in the six months ended December 31, as fuel costs rose to a record and it made severance payments to workers.

Singapore Airlines' shares are the biggest gainers this year on Bloomberg's airlines index, rising 17.7 per cent. The carrier's third-quarter profit fell by a less-than-expected 15 per cent to S$397 million ($392 million).

Temasek, wholly owned by Singapore's Ministry of Finance, had S$90 billion of assets last year, controlling companies that made up 44 per cent of the Straits Times Index.

Besides Qantas, Temasek's Australia-based assets include a 25.5 per cent indirect stake in Australand Property Group, the nation's fourth-biggest real estate developer, through CapitaLand.

Singapore Airlines sold 6.3 per cent of Air New Zealand in October 2004 for $61.7 million, reporting a one-time gain of S$45.7 million from the sale.

Temasek has sold investments in the past week including its entire holding in Olam International, an agricultural ingredients supplier, and some of its shares in Singapore Telecommunications, Southeast Asia's biggest phone company.

- BLOOMBERG