There's been radio silence ever since, but a sale of the stake makes sense, with Air Pacific recording losses as it faces assault on two fronts - Virgin Blue's long-haul carrier, V Australia, has been targeting the route, while Qantas's no-frills Jetstar is also flying to Fiji.

It's somewhat paradoxical that the more success Jetstar achieves, the lower the value of Air Pacific.

Qantas is also battling underperformance at Jetset Travelworld, in which it has a 58 per cent interest following the 2008 merger of Qantas Holidays and Qantas Business Travel with Jetset, 's largest listed travel agency franchise.

The move was part of a strategy intended to see various Qantas businesses (including the frequent flyer program) transferred into vehicles that would be valued separately by the market but with the airline maintaining control. The plan hasn't worked. Jetset Travelworld's market value has declined more than 60 per cent since the merger, while the group last month announced a 68 per cent fall in first-half profit. It seems that Jetset Travelworld has failed to capture the benefits of a rebounding travel market that have flowed to rivals including Flight Centre, Webjet and Wotif - Flight Centre's profits declined by just 5 per cent for the period.

There are no easy answers for a turnaround. Qantas may be tempted to take out the minorities to avoid the glare of a separate listing. But this risks creating more problems - airline customers of the travel agency business would be reticent about dealing with a business wholly owned by a rival airline, while exposing a low-margin travel agency operation to layers of Qantas bureaucracy could further hurt profitability.

Even making an exit would be difficult. Private equity interest in the franchise travel agency sector would be lukewarm following CVC Asia Pacific's disastrous acquisition of Stella from MFS. The best hope is a sell-down to institutions, but a credible plan for restoring profitability will be needed first.

CLEANING UP

Transpacific Industries' acquisition capacity will be tested in coming months. The NSW Treasurer, Eric Roozendaal, yesterday introducing legislation to allow the sale of WSN Environmental Services, the state-owned waste management service. If all goes to plan, a sale will be completed by the end of October.

WSN contracts with local councils to operate kerbside collection services, with 11 waste recycling, processing and disposal facilities in Sydney. The structure of the deal is yet to be finalised, but a price tag of $200-$300 million is thought likely.

The WSN operation has long been identified as a trophy asset for Transpacific, and one of few potential acquisitions that the group will consider after calling off a debt-fuelled acquisition binge when the company was on its knees last year. An $800 million equity raising was required last July to get the balance sheet under control.

Even now Transpacific's ability to complete a sizeable acquisition is in question, as the group remains highly indebted, with forecast net debt of about $1.6 billion at June 2010. Goldman Sachs JBWere estimates that interest cover for the year to June 2010 will be just 1.4 times, leaving little scope for additional debt without an equity raising.

Even without participation from Transpacific, there would be no shortage of buyers for WSN. Sources close to the waste management industry expect strong bidding from 's SITA, while other international trade buyers include Veolia and Remondis. Domestic players Thiess, JJ Richards and Cleary Bros are also likely to show interest, alongside private equity.

SILVER LININGS

Official estimates of the impact of Melbourne hailstorms on listed insurers are yet to be released, but early estimates from Macquarie Equities Research - based on a comparison with Sydney storms in 1999 and 2007 - are for total losses of between $400 million and $1 billion. Losses at this level will hit the bottom lines of all insurers, but the longer-term impact on the largest players, Suncorp Metway and IAG, may yet be positive.

According to Macquarie, there are two potential benefits of the storms. First, the hailstorms could assist in reducing the ranks of the uninsured by demonstrating the need for, and value of, insurance. Secondly, if any recent entrants to the personal lines insurance market have underpriced their policies as a result of misjudging the likely magnitude of catastrophe claims, the storms will see policy prices jacked up in short order.

ROUGH RIDE

Alesco is set for an ugly day following an after-hours profit downgrade last night.

The company marked down full-year earnings expectations by 25 to 30 per cent after ''a much weaker than expected third quarter performance'' that is expected to carry over into the fourth quarter.

Alesco noted that the previous forecast had been dependent on the ''timing and pace of the recovery in the new housing and renovations markets and the impact of stimulus into the broader construction markets''.

Investors will question whether profit expectations elsewhere in the sector are set to be ratcheted back.