Qantas Air NZ role foiled by Singapore

Friday 31st August 2001

By Graeme Kennedy

Qantas' plans to gain a foothold in Air New Zealand appeared to evaporate more than six weeks ago when Singapore Airlines' chief executive Dr Cheong Choong Kong insisted his airline's 25% stake was not for sale.

The Australian carrier had, with strong support from its government, proposed buying SIA's holding and after the adamant refusal was expected to drop the idea.

Air New Zealand acting chairman Jim Farmer QC told The National Business Review - "Once SIA said they would not sell under any circumstances, that seemed the end of it - I don't now how the New Zealand and Australian governments think that difficulty can be overcome."

Dr Farmer said his board's unanimous preferred option has always been for the New Zealand government to relax the limits on foreign ownership to allow SIA to increase its stake to 49% and inject desperately needed capital into the Air New Zealand-Ansett Group.

Yet despite SIA having emerged the front runner after cabinet consideration of a report by investment bankers Cameron & Co this week, the Qantas proposal remains on the table.

While some in the industry believe Qantas' persistence has been little more than spoiling tactics to delay the inevitable emergence of a stronger regional competitor, the carrier itself said SIA's more influential role in Air New Zealand would create "an imbalance" in the Asia-Pacific aviation environment.

But with Qantas leaving Wellington this week to SIA and Dr Cheong, the Australians have signalled the government will go Singapore's and Air New Zealand's way - with conditions including possibly limiting SIA's stake to around 35%.

Some form of government participation has not been ruled out, although Prime Minister Helen Clark said this week - "It is not our wish to go near a shareholding."

The government is expected to announce its decision next week - if all parties can agree to what will be some strict and complex restrictions.

Meanwhile, Air New Zealand has delayed releasing its annual financial result from Tuesday until September 13 to give the board time to digest the most critical ruling on the group's future.

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