Air NZ denies Qantas stake a done deal

By FRAN O'SULLIVAN AND NZPA

Air New Zealand chairman John Palmer has denied that a Qantas stake in the national carrier is a "done deal".

His denial comes after an attempt by National to force the Government to disclose its hand over the proposed sale before Saturday's election.

Yesterday, National's Finance spokesman, David Carter, claimed Air New Zealand's board had agreed to a sale by a slim majority after "acrimonious debate".

Senior management, which had advised strongly against the deal, had been threatened with dismissal if they spoke out.

He claimed it was a "done deal".

In a statement to the New Zealand Stock Exchange, Mr Palmer said Mr Carter's assertions "were factually wrong".

He said when the board made any decision of strategic significance it would be announced immediately to exchanges on both sides of the Tasman.

Finance Minister Michael Cullen confirmed the discussions, but said no laws would be changed to accommodate the deal.

He had told the Air New Zealand board that any proposal brought to him must not require legislation.

"That means it has to pass Commerce Commission approval. It cannot override the Commerce Commission," he said.

Once a proposal was received it would be considered in terms of three issues.

These would be the Government's interests as the clear majority owner of Air New Zealand, general national interest issues and competition issues.

"There is no prejudgment about what the outcome of any proposal will be," he said.

But Dr Cullen's statement in a Sky TV debate that he could not understand the assumption that "somehow or other Qantas being involved was worse than any other airline" had astonished political opponents.

"I ask you the counter-factual question.

"If we decide to compete head on with Qantas in full competition, why do you assume that Air New Zealand is going to win that competition and how deep do you think the public pocket should be to keep that competition moving along?"

Only the Progressive Coalition had indicated it would approve such a deal.

Potential coalition partners New Zealand First and the Greens have both said that they either oppose it or have reservations.

Greens co-leader Rod Donald said on National Radio: "Australians already own enough of our economy and we don't think it makes sense for the competing airline to take a stake in our national carrier."

New Zealand First leader Winston Peters said: "At stake is the added value of air transport when it comes to tourism for New Zealand and New Zealand's economy.

"At stake is the control of this airline by the New Zealand people."

Aviation analyst Peter Sigley, of JB Were, said that it was difficult to believe that no laws would be changed to accommodate a deal because the Air New Zealand-Qantas alliance would shatter conventional ideas about market dominance. "Competition's the big one," he said.

"I'm sure they'll try and work out a way to allow Virgin Blue accelerate its access into the market [but] is it really going to be a fully viable competitor to Air New Zealand and Qantas?"

"Maybe it's got to a point where if they come out shortly after the election and confirm that a transaction has occurred, and then it becomes apparent that a whole lot of work has gone into it ahead of time ...

"It's going to be really hard for [the Government] to deny a week after the election that there wasn't some sort of dialogue."

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