Brash comes out fighting against Qantas stake

By FRAN O'SULLIVAN

National Finance spokesman Don Brash has damned the proposed Qantas shareholding in Air New Zealand as "not in the national interest".

Brash says the Government - which has an 82 per cent stake in Air NZ - must ensure it openly examines all ownership possibilities for its holding in the national flag carrier.

The senior National politician - making his first public foray on this issue - stressed that a shareholder does not have to sit passively waiting to see who might approach them.

"I don't know what arrangement they have with Qantas. But if you are running a private company and somebody approaches you to do a deal, I would have thought it was totally sensible, indeed if not mandatory, to consider that option against other potential options."

Brash's warning comes as Air New Zealand prepares for the release on Wednesday of its first major financial result since the Government-led $885 million bailout late last year.

Speculation has increased that a transtasman aviation merger is all but a foregone conclusion, since Air New Zealand issued a statement last week confirming both airlines had agreed a strategic alliance would be of mutual benefit.

The airline qualified its statement by stressing that no commitments had been made and any deal would be subject to regulatory approvals.

The Air New Zealand statement essentially replicated comments in a Qantas prospectus earmarking a portion of its capital raising to acquire shares in Air New Zealand if required.

Brash told the Herald he "had nothing against Qantas".

"I think the relationship with Australia is hugely important to New Zealand," he said. "But I think the idea of effectively handing control of Air New Zealand to Qantas is almost certainly not in our national interest."

"I say that as someone who in principle not only has those views about Australia and Qantas, but also in principle sees foreign investment as normally very positive for New Zealand.

"But I think there are competition issues which to me make a move of that kind really quite undesirable."

Brash believes the Government made a serious mistake by allowing the decision-making process over the Air New Zealand recapitalisation to be so drawn out. He had favoured the Singapore Airlines/Air New Zealand/Ansett Australia alliance, competing with British Airways/Qantas.

Last week, Qantas announced a net profit of A$428 million ($498 million) for the year ended June 30, up 3 per cent on the A$415 million for the previous year.

Air New Zealand's result is keenly awaited by analysts to see how it is weathering tougher post-September 11 conditions for international aviation and the loss of Australian feeder traffic since the Ansett collapse.