Paul Phelan/MELBOURNE
Singapore Airlines (SIA) is to share ownership of Melbourne-based domestic carrier Ansett Australia with Air New Zealand after agreeing to buy out the 50% stake in Ansett Holdings held by the News Limited media group.
The deal means that the two flag carriers will also hold equal stakes in the 49% of long-haul operation Ansett International available to foreign ownership. Ansett Holdings also owns three regional airlines, separate domestic and international cargo operations, aircraft maintenance and spares services and extensive travel interests.
The sale does not affect News' 100% control of Ansett New Zealand or Australian Worldwide Aviation Services, although the likelihood of both operations remaining part of the media giant is questionable.
SIA's A$500 million ($325 million) investment does not include any capital injection for Ansett, although chief executive Cheong Choong Kong says that, if there is a requirement for more capital, the Singapore carrier is "not averse to putting it in".
News is to retain its link with the Australian carrier - parent company News Corporation having granted SIA's request that Ansett executive chairman Rod Eddington remain in position for at least two years. He is deputy chairman of Australian-based News Limited and sits on News Corporation's executive committee.
News Limited chairman and chief executive Lachlan Murdoch says it is deposing of Ansett because the airline does not represent a core activity, adding that a sale is now possible following the restoration of the carrier's "financial viability".
The SIA-News deal must be approved by the Australian Consumer Competition Commission and the Foreign Investment Review Board, while Air New Zealand has the right to match the offer.
However, opposition is unlikely as the New Zealand flag carrier is an ally of SIA, while, after a recent meeting with Cheong, Eddington and Murdoch (above), Australian prime minister John Howard appeared to indicate that the deal would encounter no political barrier.
Australian policy allows aggregate foreign ownership of domestic carriers to exceed a 40% ceiling where a proposal is not contrary to national interest. For Australian international carriers, similar rules apply.
Ansett International will retain its current ownership structure, with 49% held by Ansett Holdings and 51% by Australian institutional investors, protecting its entitlements under current bilateral agreements.
Source: Flight International
