Qantas Airways (ASX:QAN)
is offloading 13.8 hectares of land in Mascot to LOGOS Property for $802 million.
The airline has entered into binding agreements with a consortium led by LOGOS after receiving 18 bids from a range of Australian and international syndicates. Settlement of the vast majority of the lots is expected in the first half of this financial year, with the funds to be used to reduce debt and accelerate the airline’s recovery.
“We’ll use these funds to help pay down debt that we’ve built up during the pandemic. The strength of this sale and its impact on our balance sheet means we can get back to investing in core parts of our business sooner," said CEO Alan Joyce.
The transaction remains subject to some conditions and further detail on the expected financial benefit of the sale will be provided with the Qantas Group’s financial results in February next year.
“We went into this process open-minded about whether we’d sell some, all, or none of this land depending on the response from the market. That response was extremely strong and it has resulted in the sale of all the land."
The national carrier has also entered into discussions with LOGOS about potential future development options for the sites they are acquiring, including creation of a dedicated precinct for the airline, as well as the sale of an additional 3 hectares of land that adjoins some of the lots being sold.
Qantas expects to complete the evaluation of these proposals early next year, and if an agreement is reached, it has the potential to raise the value of the deal to more than $1 billion, according to Qantas.
A review of the airline's national property footprint earlier this year made clear there is no long-term need for Qantas to develop the land, which is largely surplus to its operations. Qantas will lease back portions of the land for a period of time while arrangements are made to relocate some of the functions that the land is currently used for and while LOGOS progresses its broader development plans.
“The extended lockdowns and border closures of the past few months have been extremely tough, but this transaction adds to the growing momentum around our recovery."
Shares in Qantas (ASX:QAN)
are trading 1.4 per cent higher at $5.66.