Qantas moves signals airline consolidation

By CNN's Grant Holloway

SYDNEY, Australia (CNN) -- Tuesday's announcement that Qantas had been approached to take a significant stake in Air New Zealand foreshadows a much-anticipated consolidation of the airline sector in the Asia Pacific region.

The four key airlines involved all have something to gain from a reshuffling of the assets as does 30 percent Air New Zealand shareholder Brierley Investments Ltd, namely to finally offload its stake at an acceptable price.

Qantas could gain more control, and therefore consolidation, of the trans-Tasman air market.

Singapore Airlines, via a purchase of Ansett from Air New Zealand, could gain a major slice of the Australian market.

Air New Zealand could get the cash injection it desperately needs and, perhaps, loosen its restrictive ownership rules.

Many 'coinciding agendas'

"There are a lot of coinciding agendas," managing director of the Center for Asia Pacific Aviation Peter Harbison told CNN.

"The key is whether the New Zealand Government will see it as a good idea."

The trigger point for the latest development is Air New Zealand's need for a significant cash injection following its purchase of number-two Australian operator Ansett from media company News Limited last year.

Analysts concur that Air New Zealand paid too much for Ansett and with a bill of at least $2 billion needed to finance a fleet upgrade -- primarily to replace the aging and strife-prone Ansett fleet -- the Kiwi airline is fast running out of options.

"There is a considerable degree of urgency for Air New Zealand to get Ansett's losses off their back," said Harbison.

Call for more details

The die was cast when the New Zealand Government blocked a plan by Brierley to sell down its Air New Zealand stake to Singapore Airlines, already a 25 percent shareholder.

Air New Zealand responded by suggesting the New Zealand government provide a $NZ700 million ($300 million) injection to help it overcome some pressing cash flow difficulties.

So far the New Zealand Government's response to the Qantas factor is to call for more details of any proposed plan, with Transport Minister Mark Gosche saying the Government had to consider both competition issues and international landing rights issues.

Regardless, the new situation increases the pressure on the Kiwis to reconsider the Air New Zealand ownership policy.