NICK IONIDES ATI SINGAPORE
Australia's once-troubled second carrier Ansett has reported strong year end earnings, but observers say that its turnaround has raised the stakes in a battle surrounding its ownership.Early in September Ansett reported a fourfold increase in both net and operating profit for its 1998/9 financial year to June, with improvements shown in virtually all areas.
Executive chairman Rod Eddington says the strong results are above target and are the product of "a blend of increased revenue, improved efficiencies and firm cost controls".
Ansett's parent is 50%-owned by media giant News Corporation and 50% by Air New Zealand. The latter bought its stake in 1996, at the same time winning the pre-emptive right to match any formal offer should media giant News Corp ever opt to sell out.
In March, Singapore Airlines (SIA) and News Corp announced a conditional deal under which SIA would purchase the stake for A$500 million ($320 million). SIA began formal due diligence on Ansett, but, as it was doing so, Air New Zealand indicated that it would probably match the formal offer eventually made by SIA.
In June, News Corp withdrew its stake from sale and has been saying since that it is happy holding onto it for the moment. Many warn, however, that the ownership battle is not yet over.
Some analysts believe that News Corp feels its Ansett stake is worth up to 40% more than the A$500 million for which it was planning to sell to SIA.
SIA has not commented since News Corp withdrew its stake from sale. Air New Zealand, meanwhile, has indicated that it is still interested in increasing its shareholding in its Australian partner.
Air New Zealand, in releasing its own strong set of full-year financial results in early September, says that the ownership wrangle has yet to be resolved and that it is still working towards a "suitable outcome".
It said in announcing a 48% increase in net profit for the year ended 30 June: "While the future ownership of News' 50% interest in Ansett has yet to be resolved, Air New Zealand continues to work towards a suitable outcome for its shareholders."
Source: Airline Business
