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Qantas Considers De-Merger Under Capital Review

Australia's Qantas Airways said on Thursday it was considering a de-merger or a share buyback as it seeks to move on following a failed A$11 billion (US$9 billion) takeover bid.

Qantas listed the alternatives as part of a capital management review in a series of slides ahead of an investor presentation, but did not give further details.

It also gave growth and acquisitions as alternatives and said it was considering a small freight acquisition in Asia. The airline said the current operating environment was favorable, and it expected the conditions to continue for 12 to 18 months.

Qantas was briefing investors behind closed doors following the collapse of the bid by a consortium including Macquarie Bank for the airline earlier this month.

It was unclear what Qantas meant by a de-merger although analysts have said it could raise more than A$3 billion from selling parts of the business such as freight, maintenance and catering.

Qantas last year backed out of plans to sell its catering business because the potential sale price was not good value. Qantas has reportedly also considered listing its low-cost subsidiary, Jetstar, on the Australian Stock Exchange.

Analysts expect Qantas to return as much as A$2 billion to shareholders. The airline had said last week it was reviewing its capital management strategy over the next few months.

The airline wants to expand its domestic business and Jetstar, restructure its international operations and pursue cost cuts.

Chairman Margaret Jackson announced last week she would quit the airline amid criticism of how she handled the failed takeover, but Chief Executive Geoff Dixon and other senior managers would stay on board.