The end of an era for Qantas

In what’s being called a win-win agreement, Qantas has made a deal with Sydney Airport over its domestic Terminal 3.

Qantas Airways Limited has reached a commercial settlement with Sydney Airport that determines long-term certainty to both parties for the airport’s Terminal 3.

Under the terms of the 10-year deal Terminal 3 will revert from Qantas to Sydney Airport as of September 1 2015. Qantas held a 30-year lease on the terminal, signed in 1989, which was due to expire on June 30 2019.

Qantas will come out of the deal smiling, with total cash proceeds of $535 million coming their way from Sydney Airport, and a $210 million gain on sale being recognised in FY2016, outside of Underlying Profit Before Tax.

In line with current operations, Qantas will retain exclusive use of Terminal 3 and will continue to manage most of the terminal on behalf of Sydney Airport until June 30 2019.

After that time, Qantas will no longer hold exclusive rights over the Terminal, but will retain priority usage through to June 30 2025. Priority usage includes a majority of the terminal’s gates, check-in and baggage facilities.

Use of the terminal by Qantas from September 1 will incur a per-passenger charge at an agreed rate through to 2025.

Qantas Group’s ceo Alan Joyce said the agreement was strategically and financially positive for both parties, and for Qantas customers it will be business as usual.

“This deal secures Qantas’ long-term position in our largest hub, ensuring priority usage as the primary airline customer of Sydney’s Terminal 3,” Joyce said.

“We now have certainty about our future operations in Terminal 3 post-2019, and an outcome that is a win-win for both Qantas and Sydney Airport.”

Qantas and Sydney Airport have both settled on five-year agreements that cover Qantas’ domestic runway charges and Qantas and Jetstar’s international aeronautical charges.

In welcoming the deal, Sydney Airport’s md and ceo Kerrie Mather said, “We’re delighted with this agreement, which is the result of long-term and collaborative engagement between Sydney Airport and Qantas, and delivers a positive outcome for both parties.”

“The agreement provides an equitable and fair outcome for both parties, as well as certainty for passengers and other airport users.”

“We are excited to now have 100% of our terminal footprint, to work closely with Qantas and from 2019 other airline partners using Terminal 3, and we look forward to continuing to provide passengers with a world-class experience.”

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