Another reason for Qantas urgently but unsuccessfully seeking $6-7 billion in a government debt guarantee might be found in major shorter term debt repayments and billions of dollars in capital that are variously buried in the accounts or do not appear in the group’s balance sheet.
These obligations are highlighted in a Crikey Daily Mail exposé by Glenn Dyer and Paddy Manning which is available to subscribers.
It is understood that these matters are of concern in the investment community, which is already turning on Qantas over the poor management of the company under group CEO Alan Joyce and chairman Leight Clifford.
The disclosures might also give Labor reason to back the Coalition refusal to grant Qantas a debt guarantee given the sums and risks involved, although they cover areas that Opposition leader Bill Shorten doesn’t want exposed by a proposed Senate inquiry into Qantas finances.
According to the Crikey subscriber story:
All up Qantas has around $12 billion of capital and other commitments that do not appear in the balance sheet. That’s allowed under current accounting rules, but when you add it to the $5.4 billion-plus of various bits of debt and interest-bearing debt, plus the $4.2 billion in pre-payments from people intending to fly on Qantas or Jetstar, the “strong liquidity” of $3 billion looks pretty weak.
The authors canvas some of the likely scenarios should Qantas falter for any reason in meeting substantial scheduled payables or continuing to pay interest, at rates adversely affected by its loss of investment grade financial ratings, in the nearer term.
The story adds to the pressing need for a parliamentary inquiry into Qantas finances, and the removal of an inadequate and incompetent management.