Allco Equity Partners managing director Peter Yates has broken silence about betting the company on the MacQanTexCoe deal – and the AEP share price has reacted by falling.

Which is understandable as there’s nothing in Yates’ discussion with the Smage to inspire confidence about plunging $980 million of his underperforming cash box on a 35% voting stake.

According to the story, it was MacBank that approached him, not David Coe knocking on MacBank’s door, as it could have been possible to interpret some Allco Finance Group announcements. And Yates’ initial response?

“Invest in an airline? You’ve got to be mad.” Well, we’ll find out in time. Reports the Smage:

Mr Yates says he was persuaded after taking a close look at Qantas, which he sees as two businesses — the “fantastic” domestic operation, which has a strong franchise with its Qantas and Jetstar brands, and the Qantas overseas operations.

“The challenge for Qantas is that its international business has not been particularly profitable,” Mr Yates said. Changing that situation would be a major focus of the consortium if its bid succeeded.

And if you only found out that after taking “a close look”, you obviously have never spoken to a Qantas flight attendant. Or read a newspaper. Or Crikey. And there is a further telling admission:

Mr Yates agrees that the Qantas investment deal looks like a big beast for AEP to swallow. But, he says, “one of the realities for a company like Allco Equity is that we have to invest in businesses we don’t know a lot about. That knowledge deficit is overcome by co-investing with partners who have a knowledge of the particular industry.”

OK, so this is where he’s going to say “David Bonderman from Texas Pacific Group, with his fantastic track record at Continental and as chairman of Ryanair”. No – Yates says the knowledge all comes from stablemate Allco Finance Group, which has experience leasing aircraft but not running anything like Ryanair. Or Jetstar.

AEP shares off 4 cents to $3.85 on our deadline. Understandably.