$141m raid changes balance of air power

By ROB O'NEILL

Singapore Airlines crystallised the future shape of the Australasian airline market yesterday, mounting a $141 million raid to win 8.3 per cent of Air New Zealand.

That shows how serious Singapore Airlines is about taking at least a 25 per cent share in New Zealand's national carrier, the highest share a single foreign airline can hold.

To achieve that level it needs further Government approval to lift its stake and acquire Brierley Investments' 16.7 per cent B-class shareholding.

Business Herald sources suggest Brierley will get a similar price to the $3 offered in Singapore Airlines' stand yesterday, valuing its B shares at $282 million. B shares can be held by foreigners while only New Zealanders can hold the A shares.

Meanwhile, according to Air New Zealand and Brierley Investments chairman Sir Selwyn Cushing, Qantas had yet to seek Government clearance to buy any Air New Zealand shares as of last Friday.

Qantas made its interest in Brierley's Air New Zealand B-class shares known late last month. Yesterday's activity, however, left the Australian airline a rank outsider in the battle for Brierley's B-share stake.

Also out in the cold, it seems, is Virgin Atlantic, without Singapore Airlines as a partner to launch Virgin Express domestic air services into Australia.

Singapore Airlines owns 49 per cent of Virgin Atlantic.

Qantas chief executive James Strong said the company had heard of a parcel of Air New Zealand shares in the market but had not intended to purchase in that manner.

He gave no indication Qantas was withdrawing from the fight, however, saying the saga "would take many turns before finalisation."

Just after 10 am yesterday, less than a day after receiving the required Government go-ahead, Singapore Airlines' brokers told the Stock Exchange it had acquired a 6.6 per cent tranche of Air New Zealand B shares. This was achieved through a reverse tender which closed at 8 am yesterday.

The broker, ABN Amro, then stood in the market until 10.30 am to pick up a further 9,583,632 B ordinary shares at $3 each to reach the 8.3 per cent target.

Sir Selwyn was beaming, describing the situation as "full of opportunities."

"I would have to be extremely happy," he said.

"It's another step to precisely where I wanted to be last year."

He said there was no change in Brierley's position on its B-share stake. Finalising the acquisition of Ansett Australia was now the company's priority. Regulatory consents for that acquisition are still pending from the Australian Foreign Investment Review Board, as is final settlement with News Corp.

Sir Selwyn yesterday indicated that the Singapore Airlines move would not put pressure on Brierley to favour it in future negotiations. However, at the shareholders' meeting in Auckland last week, which approved the Ansett buyout, he indicated a preference for the Asian carrier.

"That is the most favoured outcome," he said, "if only to take advantage of the huge opportunity in Ansett Australia and also give enormous strength to Ansett and Air New Zealand going forward."

One institutional investor who chose to largely decline Singapore Airlines' $3 offer yesterday was AMP Asset Management.

"We have sold some shares, not a lot," said AMP's equities manager Stephen Walker.

"We are on record as saying we think the shares are worth considerably more than the current price, perhaps $4 to $5."

Mr Walker said the resolution of ownership now proceeding was very positive for Air New Zealand.

"It's not only what Singapore Airlines brings to Air New Zealand, but the clarification it brings to the Australian market."

Yesterday Air New Zealand B shares reached a high of $2.90 before closing up 20c at $2.75.