Discarded suitor Qantas fights to stay in contention as Air New Zealand groom

Friday 29th June 2001

By Graeme Kennedy

Qantas Airways moved this week to ease fears its proposed 25% stake in Air New Zealand would lead to a takeover to the detriment of the tourism industry, insisting its plans would be good for both companies and the regional aviation industry.

Chief financial officer Peter Gregg was positive the Australian airline was still in with a strong chance despite the Air New Zealand board opting for a lift in Singapore Airlines' 25% stake as the preferred choice in its ownership restructure.

"We believe our proposal would bring benefits of $150 million a year to Air New Zealand," Mr Gregg said. "That would come from synergies through working closely together and derived from all aspects of the business.

"It would provide growth for Air New Zealand. Our proposal has been portrayed as being in our own self-interest, but it involves only 25% - Air New Zealand would remain an independent carrier and [our plan] would remove a very large financial burden in Ansett Australia. Our proposal has always been that Qantas be a cornerstone investor, which is necessary for a close relationship."

The Qantas package includes buying Singapore Airlines' B shares, SIA buying Ansett Australia and Brierley Investments selling its 30% stake.

"BIL wants to get out and that would be in the best interests of Air New Zealand shareholders but we would have to assist in facilitating their removal from the share register," Mr Gregg said.

"We have discussed these proposals with New Zealand government officials and ministers and no details have been finalised, but they would involve BIL's stake being sold to another party controlled by New Zealand entities."

Mr Gregg said Qantas remained an alternative as it would acquire just a 25% shareholding, which required no government change to the foreign ownership cap which would need to be lifted to accommodate an increased SIA holding.

He said a Qantas-Air New Zealand partnership would bring stability to the region's aviation scene and correct an imbalance if the SIA-Air New Zealand-Ansett Australia grouping went ahead.

He pointed out the trio would have 110 billion combined revenue passenger kilometres compared with Qantas' 64 billion - "an imbalance that is not in the long-term interests of regional aviation or Qantas," he said.

"Qantas would be weakened and unable to provide the competition governments require."

Mr Gregg agreed an SIA-owned Ansett Australia would strengthen Qantas' domestic rival, but two strong groups were important in the region rather than the balance shifting to one.

Air New Zealand directors put their detailed proposals for SIA to the government late yesterday

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