SIA refuses to sell Air NZ stake to Australia

Friday 3rd August 2001

HOPPING MAD: But SIA won't sell

By Graeme Kennedy

Air New Zealand acting chairman Jim Farmer QC, says Qantas faces at least two major problems in achieving its bid to acquire Singapore Airlines' 25% holding in the national carrier.

"SIA won't sell and I don't know how the New Zealand and Australian governments think that difficulty can be overcome," he told The National Business Review yesterday.

"Our board thought there was some merit in the Qantas proposal, but once SIA said they would not sell under any circumstances, that seemed to be the end of it. Air New Zealand is in no position to consider the Qantas proposal at this point because of the commitment we have entered into with our significant stakeholder, SIA.

"Our preferred option, by unanimous decision by the Air New Zealand board which includes directors from SIA, is for the New Zealand government to relax limits on foreign investment to allow SIA to take a 49% shareholding and inject additional capital into the Air New Zealand-Ansett group.

"The board's decision is supported by a current memorandum of understanding between Air New Zealand and SIA and both parties have affirmed their commitment to the preferred proposal."

Dr Farmer said New Zealand government approval of the SIA plan would "obviously" be subject to conditions guaranteeing continued New Zealand control of the national carrier.

He said he was not surprised by Australia's intervention in the New Zealand government's decisionmaking process as Canberra had a legitimate interest in Air New Zealand's future under the single aviation market between the two countries.

Australian Transport Minister and Deputy Prime Minister John Anderson held talks with his counterparts in Wellington this week to push the Qantas case.

Mr Anderson expressed concern that the SIA proposal could create "an unhealthy imbalance in the global, regional and Australian aviation markets" and said he wanted the Qantas proposal "fully developed and evaluated."

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