While many investors are steering clear of Qantas in the wake of its record $252 million half year loss, the company’s biggest shareholder has continued to lift its stake in the airline.
US investment giant Franklin Templeton Investments and its affiliates, which include Melbourne firm Balanced Equity Management, have been steadily increasing their stake in Qantas as its financial performance, and share price, worsens.
The company on Wednesday revealed it had lifted its stake to 17.5 per cent through the purchase of another 3.4 million shares since late February.
Franklin has steadily lifted its stake from 10.9 per cent since August 2013, amid a tumultuous period for the airline, in which its credit rating was downgraded to junk status.
The company’s share price is currently trading at around $1.08, down from $1.90 in May 2013, and at a fraction of the $5.60 investors were offered as part of a private equity takeover proposal in 2007.
Franklin’s moves to increase its holding may be seen as a positive for chief executive Alan Joyce, who has faced calls to resign but maintains he has the support of key shareholders.
In response to falling earnings, Qantas has embarked on a massive cost cutting program, which includes 5,000 job cuts.
It has also been lobbying for federal government assistance and for foreign ownership restrictions on the airline to be lifted.
The Abbott government has ruled out providing a debt guarantee and its efforts to remove the foreign ownership restrictions appear likely to be defeated in the Senate.
Qantas has argued the ownership restrictions need to be lifted to allow it to compete on a level playing field with Virgin Australia, which has the support of three foreign-owned airlines: Etihad, Singapore Airlines and Air New Zealand.