Paul Phelan/CAIRNS
QANTAS IS PRESSING The Australian government to limit Air New Zealand's stake in Ansett to 25% - the same ceiling applied to British Airways' equity in Qantas in 1993
As Australian and New Zealand governments study the ramifications of Air New Zealand's move for a progressive acquisition of TNT's 50% stake in Ansett, Qantas chairman Gary Pemberton is demanding consistent government policy on foreign owner- ship. Guidelines for Australia's Foreign Investment Review Board, one of the agencies studying the deal, stipulate an ownership ceiling of 25% for any individual foreign carrier.
Air New Zealand and TNT signed a memorandum of understanding earlier this month involving the acquisition of an initial 25% stake in Ansett Holdings by the New Zealand carrier at a cost of A$200 million ($151 million). Under the agreement a further 25% could be purchased for A$225 million by February 1998.
Pemberton told shareholders at Qantas' annual general meeting in late October that, despite a A$320 million ($240 million) operating profit in the last financial year, "...the outlook is less clear because of potential increased foreign ownership of Ansett. We could be entering a period of significant further change in aviation policy. It has been obvious for some time that some form of equity relationship between the two was likely. Strategically, it therefore comes as no surprise to Qantas, and you may assume that we do not come to the issue unprepared."
He also warned shareholders that they will need to address the impact on their share values of limiting foreign equity: "A number of commentators and foreign investors have said we should have two classes of shares - one for foreigners and one for domestic holders. Had we done so, there is no doubt that the value of Australian-held shares would have been lower, insulated from the buying pressure of foreign demand. One only has to look at Singapore Airlines and Air New Zealand, where foreign shares sell 25-50% above the locals."
While saying that Qantas has no plans to divest its 19.5% shareholding in Air New Zealand, Pemberton says, that the changing regulatory environment would be a major factor.
"In this environment, our equity interest in Air New Zealand becomes important," he says. "It will raise a multitude of considerations in order to ensure we extract maximum benefit for our shareholders for that investment."
Source: Flight International
