Qantas edgy as Ansett Australia sale looms

SYDNEY - Ansett Australia's sale edged a step closer yesterday as Sydney Airport hammered out a deal to transfer a crucial terminal lease to the airline's buyers, removing one of the last major stumbling blocks.

Reached after weeks of negotiations between airport authorities and the Tesna consortium, the deal rattled investors in flagship carrier Qantas Airways, which expects to lose some of its massive domestic market share to its former second-ranked rival.

"Some people had begun to assume that Tesna may just fold and go away. The fact they're active and closing off their conditions means they're getting close to presenting the final bid," said Simon Gresham, aviation analyst at Merrill Lynch.

Melbourne millionaires Lindsay Fox and Solomon Lew's Tesna and Ansett administrator Andersen said they expected to clinch quickly the final sale deal for Ansett, which is losing $A6 million ($7.36 million) a week.

"Ansett is improving its position every day we move towards the finalisation of the sale to Tesna," said Mark Korda, one of two analysts from Andersen.

Shares in Qantas, which is estimated to dominate around 80 per cent of the $A10 billion market, dropped 19c, or 4.6 per cent, to $A3.93, snapping a six-day rally that had seen the shares rise 11 per cent to $A4.12 by Thursday's close.

"The build-up this week in the Qantas share price was on Ansett not reaching an agreement [with airport authorities] and them falling over, so today's announcement has hurt Qantas quickly," said Macquarie Financial Services dealer Steve Mayne.

The in-principle airport deal includes an agreement on third-party terminal access which had proved a sticking point between Sydney Airport and Tesna, which now has to finalise lease transfers with other airports around the country.

"The parties had found common ground and had reached agreement in principal in key areas - including a commitment that Tesna operates as a domestic airline," said Sydney Airports chief executive Tony Stuart.

Sources close to the deal say Tesna was likely to pay a deposit of about $A5 million on the Sydney terminal lease, which would take a week or two more to finalise.

Transport Minister John Anderson, whose office has been in regular contact with both parties, welcomed the agreement on the lease for the airport, which is slated for privatisation later this year.

"Any outstanding issues that must be resolved before Ansett flies under the Tesna banner are now almost exclusively of a commercial nature," said Mr Anderson.

Analysts said the prospect of Tesna reaching a deal with discount carrier Virgin Blue and providing a more formidable opposition was also weighing on Qantas.

- REUTERS