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SYDNEY - Takeover target Qantas Airways today released an earnings forecast for 2008 in a bid to appease major shareholders who believe a US$7 billion ($10 billion) takeover bid for the airline is too low.
Qantas said it expected profit before tax of about A$1.23 billion ($1.4 billion), which it said was the average of analyst forecasts ranging from from A$975 million to A$1.5 billion.
The airline also said it expected its fiscal 2007 earnings to be at the upper end of its previous forecast for a result 30-40 higher than last year.
Qantas said it was responding to questions from some investors and media comment following the Macquarie Bank Ltd. -led private equity bid for the airline, which has been supported by the airline's board.
Shares in Qantas fell to a three-month low this week on growing concern that key shareholders might block the A$5.45 a share bid, which needs 90 per cent of shareholder acceptances to succeed.
UBS Global Asset Management and Balanced Equity Management have privately criticised the offer as too low and wanted Qantas to release a 2007/08 earnings forecast to back the board's decision, local media have said.
Qantas on Thursday said the 2008 forecast did not take into account a number of issues that could have negative impact on its results.
These included a decision by Tiger Airways to start services in Australia, increased capacity from rival Virgin Blue and plans for Qantas to secure new aircraft to hold its market share.
The airline said it also faced a number of contingent liabilities, and the outlook was subject to fuel costs, growth in demand and continued cost savings.
The bidding consortium -- which also includes private equity group Texas Pacific , Allco Equity Partners , Allco Finance Group and Canadian investment firm Onex Corp. -- has said it will not raise its offer for Qantas.
The proposed sale of the airline, a national icon dubbed the flying kangaroo, has run into public and union opposition, but has been cleared by the government.
- REUTERS
