Qantas gets Air NZ nod

By STAFF REPORTERS

The Government is expected to receive a firm proposal for the sale of a significant stake of Air New Zealand to Qantas on Monday.

A decision on the deal is expected by the end of the year.

The package will be sold politically as a "partnership" to try to dispel public concern about a sale to Qantas and the fact that the airline is being sold overseas so soon after the Government spent almost $1 billion bailing it out.

The Herald understands the deal will include a national interest package which will preserve the Air New Zealand brand and protect jobs on this side of the Tasman.

Finance Minister Michael Cullen said through a spokeswoman last night that "the Government is ready to receive a proposal".

"The Government has been aware for some time that Air New Zealand wanted a proposal up before Christmas," the spokeswoman said.

"Michael Cullen has received no proposal at this stage."

If a deal is announced next week, the Government will avoid immediate political criticism in Parliament which is in recess.

Leaked news of the plans immediately sparked opposition to any sale to Qantas.

The Opposition and some unions say the link would be anti-competitive.

One union source last night described the deal as "crazy", and National MP John Key said it would hurt passengers by cutting competition and driving prices up.

Air New Zealand has called a meeting of union representatives and its executives on Monday to discuss a "business decision".

The company's spokesman, Mark Champion, would not say if a meeting had been called or what it was about.

"Discussions between Air New Zealand and Qantas are continuing, no agreement has been reached and when we have anything to report, we will."

Chief executive Ralph Norris said two weeks ago that talks with Qantas were down to the "nitty gritty".

Air New Zealand wanted its plans afloat before Christmas.

John Key, National's associate transport spokesman, said a Qantas-Air New Zealand deal would lead to higher prices for customers, and cuts in the number of flights.

It was "farcical" to think the two airlines would continue to compete fully once a deal was struck.

Mr Key said he believed the two airlines have been holding talks with the Commerce Commission for some time in a bid to get pre-approval for the deal.

Any deal would have to be approved by the commission, and its Australian equivalent, as well as the Minister of Transport and the Cabinet.

Service Workers' Union secretary Darien Fenton said airline staff faced an anxious weekend waiting for news.

She said aviation unions had been given an urgent invitation to attend Monday's meeting in Auckland at 10am.

They had received no assurances about job security.

The Airline Pilots Association has also been called to the meeting.

Australia's Government last night said it did not know anything of the deal.

Transport Minister John Anderson was "in the bush" and not available.

The Government was last year forced to effectively renationalise Air New Zealand after the collapse of its Australian subsidiary, Ansett.

It announced an $885 million recapitalisation project for the company, buying an 82 per cent stake.

And it said it would give more money if necessary.

Ansett's demise, and the reasons for it, created tensions between Air New Zealand and Qantas, and the governments of both countries.

At one stage, angry Ansett staff who lost their jobs blockaded an Air New Zealand aircraft at Melbourne airport after learning Prime Minister Helen Clark was a passenger.

The Defence Force spent almost $15,000 flying an Orion to Australia to rescue her.

Engineers Union secretary Andrew Little said the union supported the deal, which could make the airline more viable in the long term.

"We want to survive, but we don't want to be swamped by Qantas culture in the process."

Former Air New Zealand director Sir Selwyn Cushing is horrified.

"It just defies any sense of business common sense," he said.

It would be as stupid as having Wallabies captain George Gregan sitting in with the All Blacks and helping with tactics about the next test match.

"The Aussies will make sure it's nice and sweet and sugary for the short term, but the long term will be disaster.

"Anyone with half a brain in the airline industry will understand that."

It went against what the competitive market stood for, and highlighted the "huge mistake" the Government made last May over proposals to let Singapore Airlines buy a stake in Air New Zealand.

"The dithering of Cullen [finance minister Michael Cullen] has cost New Zealand plenty."