Paul Phelan/CAIRNS
The Australian Government has approved Air New Zealand's (ANZ) bid to lift its stake in Ansett Holdings (Ansett) from 50% to 100% by acquiring News Corporation's interest in the Melbourne-based airline. The recommendation may give fresh impetus to Singapore International Airlines' (SIA) efforts to raise its stake in Air New Zealand from 25% to 40%.
The heavily qualified approval by the Foreign Investment Review Board on 13 June has placed a series of specific conditions on the ANZ purchase, including:
• Ansett and its international arm Ansett International remain incorporated, and retain "substantial headquarters" in Australia, and Ansett International remains controlled by Australian nationals;
• consistent with its level of ownership in Ansett International, ANZ supports international opportunities for the group being primarily exercised by Ansett I international and the airline increasing its capacity consistent with opportunities available as an Australian designated international carrier;
• there be no significant reduction in employment in Australia in highly skilled Ansett airline functions as a result of deliberate management strategies;
• there be no significant reduction in regional airline employment resulting from changes in Ansett's regional network or as a result of deliberate management strategies during the next three years. The conditions also require no loss of service to Ansett regional destinations. They do, however, provide for services to be replaced by other carriers;
• Australian citizens comprise at least a quarter of the Ansett/Air New Zealand board and two thirds of the Ansett International board.
ANZ group managing director Jim McCrea says: "The conditions are acceptable and do not affect the terms of the transaction." The deal, which will see the two airlines continue to operate under their own brands, is expected to be complete by the end of the month.
Subject to completion of the Ansett purchase, Brierley Investments Limited (BIL) will sell its 16.7% holding in ANZ Class B shares, to add to the 8.3% SIA already owns.
The Singapore airline's aim is to eventually acquire a shareholding of around 40%, but so far it has been unsuccessful in persuading the New Zealand Government to relax its restrictions on foreign ownership, which places a 25% limit on shareholdings by any one overseas airline.
Observers see the Ansett decision adding pressure for a policy change to be made in Wellington. Earlier government statements suggest that while change is possible it will not be to the extent required by SIA.
New Zealand transport minister Mark Gosche has been warned that BIL's move from New Zealand to a new Singapore headquarters, its registration in Bermuda and the Singapore Government's investment in BIL and SIA could hazard the national carrier's status if SIA were to raise its stake above international norms.
BIL is putting the remaining 30% of the airline's A shares which it holds in a local trust to try and overcome its own foreign ownership issue.
A New Zealand transport department briefing paper says that although SIA's acquisition of 25% of ANZ raises no "overall control" issues, "there are matters relating to the ownership structure which require examination". These include the 7% stake in BIL held by Tamasek Holdings, the Singapore Government holding company which is also the majority shareholder in SIA.
Current New Zealand policy is modelled on the conditions set for foreign ownership of Qantas at privatisation, which allows up to 49% foreign ownership, with a limit of 25% owned by any one foreign airline and 35% in total owned by foreign airlines.
Source: Flight International
