Chris Jasper/AUCKLAND
Air New Zealand (ANZ) has indicated that it is giving serious consideration to a possible move to block Singapore Airline's (SIA) plan to take a 50% stake in Ansett Australia. The company has rejected suggestions that it has insufficient funds to mount the operation.
Ansett is jointly owned by ANZ and News Corporation, with the latter having decided to sell its stake to SIA in a deal valued at A$500 million ($333 million.)
The New Zealand flag carrier has the right to buy out remaining stock in Ansett itself, however, once News Corp confirms its intention to sell.
Given ANZ's membership of the Star Alliance, which SIA is keen to join, it had been widely assumed that the two carriers had agreed to share ownership of Ansett, but ANZ managing director Jim McCrae (left) says News Corp acted as "a seller creating a market for its shares".
Although he adds that this is "not unusual", the remark suggests the move was a business deal not pre-approved by ANZ.
While refusing to say whether Air New Zealand will exercise its right to buy all of Ansett, McCrae indicates that the option remains a live one. "We did not make the first 50% investment idly," he says.
"We are very serious. As we own 50%, we are obviously very interested in what happens to the other 50%, and therefore we are keeping our options open while this develops. Then we will decide."
McCrae says the Ansett link is vital to ANZ, in that it has allowed it "to create critical mass". He stresses that the availability of capital is not an issue in the decision, and is scathing of claims that ANZ is short of funds.
"If we did make the decision to buy, we have a very robust balance sheet and are in a very robust financial position." He adds that major shareholder, Brierly Investments, "has also restructured its debt and is in a sound financial position".
McCrae rejects suggestions that ANZ's buying power is limited by the need for fleet renewal, either of its own aircraft, or the Ansett domestic fleet.
"The average age of our aircraft is soon going to be around six years old. We therefore have very low capital demand on us in the short- to medium-term," he says. "If Ansett needs to rejuvenate its fleet, that is not a serious concern. I have a good understanding of its business and there is nothing extraordinary in its capital programme. If you are going to do fleet replacement, you don't finance it through shareholders' funds."
The question of Ansett's ownership is complicated, not only by Star Alliance considerations, but by Singaporean interests - linked to SIA - in ANZ, although McCrae dismisses the notion that these amount to a large holding. "It's not large," he says, and he will not comment on wider speculation that one outcome could see ANZ take full control of Ansett, and SIA take a major stake in ANZ.
Source: Flight International
