Posted on: Thursday, June 28, 2001
Air New Zealand pushes Singapore bid
By Ray Lilley
Associated Press
WELLINGTON, New Zealand — Air New Zealand presented its case to the government today for Singapore Airlines to take a larger stake in the national carrier after warning it must get outside help.
Air New Zealand chief executive Gary Toomey gave the warning after Finance Minister Michael Cullen repeated the state's view yesterday that it will be difficult for the government to raise a 25 percent limit on foreign airline ownership in Air New Zealand.
Singapore Airlines, which holds the maximum 25 percent stake allowable under law, hasn't said how much more of a stake it wants to take.
The local carrier needs cash to bail out its loss-driven Ansett Australia subsidiary and pay for a five-year fleet upgrade estimated to be as much as 5 billion New Zealand dollars ($2 billion).
Toomey said Air New Zealand would have little choice but to sell Ansett Australia, which is Australia's second largest airline, if the government vetoes a Singapore Air equity injection.
"Without Ansett ... Air New Zealand would eventually become a regional player. It will not have the broader range of destinations, primarily all those emanating from and out of Australia," Toomey said.
New Zealand and Australia's national interests will be hurt if Air New Zealand is cut off from Ansett, its only option for growth, he said.
Toomey dismissed government concerns that greater ownership by foreign airlines will jeopardize international landing rights held by the carrier.
"There is plenty of precedent for airlines to have up to 49 percent foreign ownership by one single carrier," Toomey said.
He cited Richard Branson's Virgin Atlantic, which is 49 percent owned by Singapore Airlines, Air Pacific and Egypt and Peru's national airline as examples of airlines with foreign ownership above 40 percent.
While Toomey would not discuss details of the proposal the airline put to government officials today, airline officials said it would address problems raised by ministers.
