PAUL PHELAN / CAIRNS
Flag carrier is pressurising the government to change legislation on ownership
Air New Zealand (ANZ) has stymied Qantas Airways' bid to buy a major stake in the Air New Zealand-Ansett group. It has asked the New Zealand Government to increase the stake a foreign airline may own in ANZ to allow its 25% owner, Singapore Airlines (SIA) to increase its equity.
In late May, Qantas submitted a surprise bid for a major stake in ANZ, but ANZ is now seeking to up the 25% maximum stake a foreign airline may own and the 35% aggregate foreign ownership cap, believing that increased ownership by SIA is its best way forward.
Acting ANZ chairman Dr Jim Farmer confirmed on 19 June that the board had endorsed the SIA option, subject to government and regulatory approvals on both sides of the Tasman Sea, after its management and consultants Solomon Smith Barney had developed and analysed "about eight" alternative options for review by the board and its independent committee of directors. "We are firmly of the view that it is in the best interests of the company and indeed of New Zealand, that we strengthen the Air New Zealand Ansett Australia group as an integrated presence, and that Singapore Airlines has a significantly increased stake."
If the plan proceeds, ANZ would seek to raise interim funding. "Dr Cheong [SIA deputy chairman and chief executive officer] has advised us that once all the required approvals and agreements are obtained, SIA will take up a placement of additional shares in the company and support a subsequent capital raising programme. One of the options is a rights issue," Farmer says.
ANZ will immediately begin negotiations with both governments on foreign ownership limits, consumer competition and air service agreements, while it also prepares a detailed strategic plan to present to its board in September.
Qantas has reacted angrily, with chief executive Geoff Dixon saying: "This is an attempt by SIA to take an unprecedented level of influence over the competitiveness and structure of the aviation industry on both sides of the Tasman."
Gary Toomey, Dixon's former Qantas executive management colleague and now ANZ chief executive, insists that SIA control is not possible. "It is not permitted by our constitution or government policy, and would lead to issues about bilateral rights," he says.
Source: Flight International
