Business bloc bids to stop Qantas

By FRAN O'SULLIVAN assistant editor

Some of New Zealand's most powerful businessmen are supporting a campaign to keep Air New Zealand out of the clutches of Qantas.

The campaign - launched by Wellington investment banker Lloyd Morrison in a wave of emails last month - has gathered steam as the negotiations over a Qantas bid for a cornerstone stake in Air NZ get down to the wire.

An informal Auckland business ginger group has been lobbied to exert private pressure on powerful ministers to keep Air NZ in local ownership.

United Future leader Peter Dunne - now locked in post-election negotiations with Labour - has also been asked for support.

Among those backing the campaign are Fonterra chief executive Craig Norgate, Sky TV founder Craig Heatley, Warehouse founder Stephen Tindall, JBWere managing director Clark Perkins and Auckland commercial lawyer Andrew Harmos.

Mr Tindall, a passionate nationalist, is understood to have been asked to raise the issue at Beehive level.

Mr Norgate said last night that he agreed with the broad theme of corporate New Zealand opposing a Qantas stake in Air NZ.

He believed business would be better served by two competing alliances: Qantas (One World) and Air NZ (Star Alliance).

Fonterra was a big buyer of business travel and had "taken the business back off Qantas" a year ago in a switch to Air NZ.

He said the national carrier's membership of the Star Alliance with its links to Singapore Airlines and United Airlines was important to the dairy exporter's business as it serviced its prime markets: Europe, Asia and the Americas.

JBWere's Mr Perkins said there were other options. The Government could underwrite a deeply discounted rights issue to enable New Zealanders to buy shares in Air NZ.

Russell McVeagh partner Mr Harmos noted: "It's completely irresponsible to run anything other than a contestable process, and I think the New Zealand capital market is an important part of that process."

Air NZ's advisers, Wellington merchant bankers Cameron & Co, have asked UBS Warburg to examine proposals for raising capital.

Air NZ will go ahead with a rights issue, possibly early next year, irrespective of whether Qantas gets a stake.

Mr Morrison sent letters to Prime Minister Helen Clark and Finance Minister Michael Cullen before the July 27 election, but neither politician answered.

He failed to get a meeting with Dr Cullen. "It was pre-election, so there was probably a sensitivity."

In a widely circulated letter to Air NZ chairman John Palmer, Mr Morrison said he could not understand the deal.

"I cannot fathom your motivation other than the simple short-term outcome which such a non-competitive outcome would bring - a short-term capital gain for the Government and a solid rise in Air New Zealand's profitability as the New Zealand aviation market becomes increasingly uncompetitive."

A case is being prepared to challenge any Qantas shareholding before the Commerce Commission and the Australian Competition and Consumers Commission on "national interest grounds".

Law & Economic Consultants are expected to release an executive summary this week.

But Dr Cullen has told the negotiating parties he will not legislate to get the Qantas deal over regulatory hurdles.

Mr Dunne has told the Herald he would view any Qantas efforts "with considerable suspicion".

"The Government made clear when it bailed Air NZ out last year that it wanted to see a predominantly New Zealand-owned domestic carrier retained. I would be very cautious about any move by Qantas."

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