NICHOLAS IONIDES / SINGAPORE, PAUL PHELAN / CAIRNS
Flag carrier awaits government decision on size of Singapore Airlines stake
Air New Zealand (ANZ) is awaiting a government decision on whether Singapore Airlines (SIA) can increase its 25% stake in a move that will decide its long-term future.
On 21 August, New Zealand finance minister Michael Cullen said the cabinet would consider the airline's future ownership on 27 August, when a status report would be delivered by outside advisers. Cullen said a decision this week was unlikely but promised the government would announce one by 4 September.
SIA wants to increase its stake in ANZ to 49% but cannot do so as existing rules limit foreign ownership by a single airline to 25%. Airlines in aggregate can hold 35% while total foreign ownership is capped at 49%.
The government is considering amending the rules but has said it will only take a decision after consulting with the Australian Government, which has indicated it supports a rival bid from Qantas Airways. Under that proposal, SIA would sell its stake in ANZ to Qantas but buy ANZ's Australian subsidiary, Ansett.
The carrier needs capital to cover debts and help fund fleet modernisation. It has said its board is unanimous in wanting SIA to increase its stake as part of a deal that would see the cash-rich Singaporean carrier helping raise capital.
ANZ has warned that its future and that of Ansett is threatened by the stalemate over the rival bids.
ANZ-Ansett group chief executive Gary Toomey says his airline is "at the point of no return", setting 4 September, the date when the group's results are due to be announced, as the deadline by which it must go to the market with a comprehensive strategy.
"In aviation, the point of no return is when you must go on to your destination, or to some alternate. You can't go back," says Toomey, who has told staff that the group is losing A$300 million ($160 million) a year and has A$600 million in the bank.
ANZ must roll over a A$1.3billion bank loan on 3 September. If no agreement is in place by then on a strategy for restructure and an investment in new aircraft, it may be forced to slash the book value of its Ansett stake, which could breach loan conditions and entitle three Australian banks to appoint receivers to bothcompanies.
Qantas chief executive Geoff Dixon is meanwhile painting a negative view of the overall Australasian operating environment if SIA manages to increase its stake in ANZ.
Source: Flight International
