Qantas tries to quell concerns

By FRAN O'SULLIVAN

Qantas Airways has provided more details of its Air New Zealand proposal in a bid to overcome strong national interest objections raised by Prime Minister Helen Clark.

Qantas chief executive officer Geoff Dixon said yesterday that both airlines would maintain independent operations and brands if a partnership emerged.

Other steps would be taken to protect Air New Zealand's international bilateral landing rights, preserve competition within both countries on Tasman and international routes and ensure that tourism interests were maintained.

But Mr Dixon did not disclose how big a stake Qantas wants. When the concept was unveiled on Tuesday, it was reported that the Australian airline would acquire both Singapore Airlines' and Brierley Investments' stakes, giving it a 55 per cent holding in Air New Zealand.

Singapore Airlines would subsequently acquire Air New Zealand's wholly owned Australian subsidiary, Ansett Australia.

But Mr Dixon said that at no time had Qantas suggested it wanted to either merge or seek outright control of its New Zealand-based competitor.

The Qantas clarification came just hours after Singapore Airlines began a distancing exercise by telegraphing that its own interest in obtaining a bigger stake in Air New Zealand was not dead.

An Air New Zealand committee formed to study the Qantas concept, led by acting chairman Jim Farmer, is also examining other ownership options. These include allowing Singapore Airlines to increase its holding above its present 25 per cent or obtaining equity participation from other Star Alliance partners such as United Airlines and Lufthansa.

The formation of a New Zealand-based consortium to buy a portion of Brierley Investments' 30 per cent stake has also been tipped.

But one of those mentioned, Auckland businessman Stephen Tindall, played down the prospect, saying newspaper headlines were not helpful.

Mr Dixon said last night that if the Qantas proposal proceeded, Air New Zealand would:

* Continue to be New Zealand-owned with a board majority of New Zealanders.

* Have a New Zealand chairman.

* Continue to have its management, head office and principal hub in Auckland.

* Remain listed on the New Zealand Stock Exchange.

The Qantas proposal could not proceed without the Ansett Group's beginning significant operations across the Tasman and starting a domestic airline in New Zealand.

Mr Dixon said if discussions proceeded as expected over the next few weeks, Qantas would provide both the New Zealand Government and the Air New Zealand board with a detailed strategy for the merger.

"We are certain the partnership would offer considerable benefits for both Air New Zealand and Qantas. It would create major synergies and growth and the grouping would have greater scale to compete more effectively in an increasingly competitive and consolidating global marketplace," Mr Dixon said.

For its part, Singapore Airlines intimated yesterday that it had not made its investment in Air New Zealand lightly. It had not initiated any approach to Qantas, nor did it favour that option over any of the others being considered.

Yesterday's statement from Qantas made it clear that Singapore Airlines was kept fully informed of the Australian airline's proposal.

A Government response to the Qantas clarification was not available last night, but Helen Clark yesterday toughened her stance, saying the Government did not favour Air New Zealand falling into Australian hands.

She rejected suggestions that Air New Zealand was in financial difficulty.

"I think Qantas has seen a public relations opportunity to have a go because of the perception that with what has happened within Ansett Australia, Air New Zealand is weaker. But Air New Zealand is protesting vigorously their cash position is not weak at all."

Deputy Prime Minister Jim Anderton has scorned the proposal, saying Air New Zealand risked ending up as a regional or even domestic airline if it was taken over by Qantas.

"This is a mess. I mean, one minute Air New Zealand has bought Ansett, the next minute Singapore wants to buy Air New Zealand, the next minute Singapore wants to buy Ansett and now Qantas wants to buy Air New Zealand - and that's all in a matter of weeks.

"What's going on here?"

The Alliance leader said the mess was a slap in the face for privatisation.

He said the proposal was being driven by Brierley Investments, based in Singapore and controlled by powerful Asian interests.

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