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British Airways Sells Qantas Stake - 2004-09-13

Britain's major air carrier sells its stake in Australia's Qantas Airways, while Australia's central bank leaves interest rates unchanged.

British Airways, the largest air carrier in Britain and the second largest in Europe, has raised $770-million by selling its 18-percent stake in Sydney-based Qantas Airways. The British airline says it will use the proceeds to reduce its debt and possibly look for other acquisitions in Europe.

Jeanette Ward, a credit analyst at Standard and Poor's Securities, says the sell-off gives both sides more freedom to pursue opportunities within their own regions. "They're focused on improving their competitive position in their own markets and looking for growth opportunities close to their own home bases," she says.

Ms. Ward says British Airways is facing growing pressure to form alliances in the European market, especially since the recent merger between Air France and Holland's KLM formed the world's largest airline in terms of revenue.

Ms. Ward says it is difficult to predict when and if Qantas might consolidate with other carriers in the Asia-Pacific region, because of issues of national interest.

Qantas has recently invested in an Asian discount airline due to start flying by the end of the year, and earlier this year purchased 49 percent of a Thai air cargo operation.

Australia's independent central bank has left interest rates unchanged at 5.25 percent for the ninth consecutive month. Economists say a rate hike could have caused complications ahead of the October 9 general election. The economy and interest rates have been a key focus in the election campaign.

But economists say the bank is likely to announce a rate hike before the end of the year, due to strong domestic credit demand and a tight labor market.

Vietnam has agreed to allow Chinese nationals on organized tours to enter the country without visas starting September 12, in a bid to attract more visitors from China.

Such visitors will only be required only to carry "laissez-passer" papers issued by Vietnam, which place restrictions on where the holder of the document can travel.

And Burma has decided to increase its oil production by 67 percent this year and reduce oil imports, in order to insulate itself from the effects of surging global oil prices.