Qantas-Australia Post freight merger on hold

Australia Post.

David Mortimer says Australia Post’s  freight and logistics division will become "the lynchpin" of its business.  

Qantas is desperately eyeing freight merger opportunities with Australia Post in order to spin-off its freight arm, but the reluctant Australia Post wants to make sure the deal adds value.

Qantas and Australia Post have two separately-run freight joint ventures, Star Track Express and Australian air Express, which specialise in business-to-business transport, and air and linehaul delivery respectively.

Australia Post chairman David Mortimer said the company was still receptive to a merger deal as far as it added value to its portfolio and earnings.

“Our position is very simple. We’re always very happy to look at opportunities that add value,” Mr Mortimer told The Australian Financial Review.

But he indicated reducing the government-owned company’s holdings in the joint ventures would be unlikely.

“Our long-term objective is, of course, to continue with the joint ventures, but if they can be structured in a more positive way from our shareholders’ viewpoint and, of course, from the customers’ viewpoint, we’d look at it constructively,” he told the paper.

Despite its struggling letters business, Australia Post reported a record pre-tax profit of $592.2 million in the 2007-08 fiscal year, boosted by its freight and logistics operations.

Qantas Freight Enterprises, which booked a $1 million fall in annual profit of $64 million in the year, comprises Qantas Cargo, Express Freighters Australia along with the group’s equity investments in Star Track Express and Australian air Express.

Qantas wanted to put its freight assets into a single integrated subsidiary in order to pursue its objective to set up another spin-off, but its previous attempts to lure Australia Post were hamstrung by complicated arrangements.

The airline also reportedly expressed interest in transport provider Linfox, but withdrew its bid as the asking price exceeded $1 billion.


According to the paper, Australia Post had held talks with the previous government over the possibility of the company’s further participation in Qantas’ move to expand its freight division.

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