Qantas Ad Campaign Revs Up Float

Sydney Morning Herald

Wednesday July 5, 1995

By CAROLYN CUMMINS

Qantas Airways will step up the tempo of its public float campaign through national newspaper advertisements today amid mixed responses from small investors crucial to the success of the issue.

Although the float is in its second day of being open to the public, private client brokers yesterday said the general response to Qantas was quiet and cautious and nothing compared to the hot demand seen for other floats such as the Commonwealth Bank or Woolworths Ltd.

Compounding the investing market's overriding caution are various brokers reports, which, while positive about Qantas's strong presence in Asia, warn that tight cost controls and a convergence in quality of products have made competition tougher.

One report by the Hong Kong office of Morgan Grenfell entitled "Asia Pacific Aviation Review", first written in December 1994 by transport analyst Mr Viktor Shvets and updated in June, says that while the sector will have increased load factors, there will be increased capacity, placing pressure on the carriers to attract more passengers.

The report, which focused on Asian airlines and did not include Qantas, noted demand in the region would grow. But quality and services among the main airlines were converging, making cost control more important than ever.

To generate interest Qantas has placed ads listing stockbroking firms' telephone numbers in that capital city. It is the first time such action has been taken during a public float.

Qantas chief executive Mr James Strong is in Europe on a roadshow talking to international investors and will move to the US at the end of the week for further discussions.

The managing director of Johnson Taylor, Mr Ross Illingworth, said there had been keen interest in the float, with up to 30 per cent of clients requesting a prospectus and attending investment briefings.

Mr Illingworth said the traditional sharebroking clients were more interested than financial planning investors, who did not want cyclicality of any form, whether from commodity-based stocks or from the airline sector. However, the managing director of James Capel, Mr Alex Burt, said only 10 per cent of his clients had requested a prospectus.