Qantas Divests StarTrack Freight Business to Australia Post

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By Esther Tanquintic-Misa | October 2, 2012 2:10 PM EST

Australia Post, wanting to capture majority of the pie that caters to the growing online shopping activities of Australians, will acquire 50 per cent of Qantas Airways Ltd's freight business StarTrack for A$408 million ($422 million).

In a statement to the Australian Securities Exchange, Qantas said it further expects to receive completion costs of about $5 million from the transactions, resulting to an expected $30 million profit.

"The growth in online shopping in Australia is increasing demand for flexible, timely and cost-effective delivery solutions for businesses and consumers," said Ahmed Fahour, Australia Post chief. Parcel volumes are presently expanding annually at 12.5 per cent.

"Under single ownership, both Australia Post and StarTrack will have a far more comprehensive offer to customers and the potential to unlock further value for our customers in the future," Mr Fahour added.

Qantas on the other end, as part of the deal with Australia Post, will get to obtain full ownership of the latter's separate Australian Air Express joint venture, which manages a fleet of eight freighter aircraft including Boeing 737-800s.

Alan Joyce, Qantas' chief executive, meanwhile said the possession of the 50 per cent stake in Australian Air Express would strengthen the airline's air cargo network.

"Through this acquisition we will be able to offer an integrated air freight product across domestic and international networks," he said. The airline had made it public in the earlier months it will offload non-core business assets such as catering and engineering units, including StarTrack.

"Over the long term we don't see that logistics trucking business as a core business for us and when the timing is right, we will sell the (StarTrack) business," Mr Joyce said.

Founded in in New South Wales in 1972, the StarTrack Express was bought by Australia Post and Qantas in 2003, at $375 million each. In the year to June 2011, StarTrack Express reported a net profit of $20 million versus the previous year's $12.5 million.

StarTrack Express manages automated freight sorting terminals on the eastern seaboard, has warehouses in most capital cities and maintains more than 3,000 vehicles, according to The Herald Sun.

The deal will still have to pass through and be approved by the competition watchdog, the Australian Competition and Consumer Commission.

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