Qantas sniffing at Air New Zealand stake


Dixon has confirmed the airlines are talking about Qantas taking a stake

By Geoff Hiscock
CNN Asia Business Editor

SYDNEY, Australia (CNN) -- Australian airline Qantas confirmed Thursday it is talking to Air New Zealand about taking a minority stake in the carrier.

Qantas chief executive Geoff Dixon said in a statement the two airlines were discussing a range of business issues, including a possible minority stake.

Air New Zealand fell into trouble last year and had to be rescued by the New Zealand government via a $366 million ($NZ885 million) recapitalization plan last October.

The government followed up in November with a decision to pump another $62 million (NZ$150 million) into the struggling carrier by June next year.

Air New Zealand is now held 83 percent by the government.

Its two big shareholders before the rescue, BIL (formerly Brierley Investment Ltd) and Singapore Airlines, saw their stakes reduced from 30 percent and 25 percent to 5.4 percent and 4.5 percent respectively.

Discussions confirmed


Air NZ hit turbulence last year after its Australian subsididary Ansett collapsed

There has been speculation recently that BIL is willing to sell its Air New Zealand stake to Qantas.

Air New Zealand chairman John Palmer confirmed the talks with Qantas in a statement to the Australian and New Zealand stock exchanges.

"These discussions have been ongoing between the two airlines since May last year," Palmer said.

"The parties continue to discuss options but nothing has been agreed."

Qantas dominates the Australian domestic marketplace, following the collapse of Air New Zealand's wholly owned subsidiary, Ansett Airlines, last September.

At the time, Ansett was the No. 2 airline in Australia. Discount newcomer Virgin Blue, which entered the Australian market in September 2000, has ramped up capacity and is now firmly entrenched as the second largest carrier behind Qantas.

Competition at home

Air New Zealand is also facing more competition at home from Qantas, which has lifted the number of flights to and within New Zealand.

Qantas has made no secret of its view that Australia and New Zealand should prepare for a closer alignment of their aviation markets.

It tried to secure a cornerstone shareholding in Air New Zealand in mid-2001, but the plan did not find favor with Singapore Airlines, BIL or the New Zealand government at the time.

Qantas chair Marjorie Jackson said last October a partnership with Air New Zealand made sense then, and still did.

Shares in Qantas rose 0.66 percent Thursday afternoon to A$4.61. In Wellington, Air NZ shares closed a cent higher at 69 cents, a gain of 1.5 percent.