Paul Phelan/CAIRNS
A surprise bid by Qantas Airways to acquire a major stake in Air New Zealand (ANZ), involving the sale of Ansett to Singapore Airlines (SIA), has prompted ANZ to dampen down speculation of a fire sale.
Analysts predict operating losses for ANZ of at least NZ$180 million ($74 million) for the year to June, worsened by two groundings of part of Ansett's Boeing 767s and the carrier's failure to deliver expected profits.
On 29 May Qantas formally declared interest in acquiring a "significant" shareholding in ANZ from the two main shareholders, 30% owner Brierley Investments and 25% owner SIA.
Under the proposal, SIA would buy Ansett Holdings, which the Singaporean carrier has long wanted. Ansett Holdings owns all of Ansett Australia and 49% of Ansett International.
ANZ's board says it will consider the proposal and its ramifications, and other options expected from an already-commissioned Salomon Smith Barney study of Ansett re-fleeting funding options, due to be presented in mid-June.
Acknowledging that ANZ had considered approaching the New Zealand Government for bridging funds, ANZ-Ansett group chief executive Gary Toomey said the Qantas proposal was just one option available to the group, which he claims will have NZ$1 billion in cash available by the end of June. "We're in good shape to meet current requirements," he says, adding that the Qantas proposal was in its infancy as regulatory and other key questions remain to be addressed.
The deal must survive the scrutiny of New Zealand's Commerce Commission and the Australian Consumer and Competition Commission, as well as regulators charged with preserving international bilaterals. It will also require a change in New Zealand policy limiting ownership by a single foreign carrier to 25%. Qantas chief executive Geoff Dixon insists, however, that the deal is "do-able".
Dixon says Qantas and ANZ would stay independent operations and brands. ANZ would continue to be New Zealand-owned with a majority of nationals on its board and a New Zealander as chairman. Its management, offices and principal hub would stay in Auckland.
"At no time has Qantas suggested it wanted to merge with Air New Zealand, or to seek outright control," Dixon said after the carrier received a cool response to the deal from New Zealand's government and opposition politicians.
He acknowledges, however, that the deal cannot proceed without the Ansett Group commencing significant operations on the Tasman and some other competitive routes; and starting a domestic airline within New Zealand.
"Our preliminary discussions with Singapore Airlines canvassed all these issues," he adds.
Source: Flight International
