Air NZ announcement confirmed for midday

8.45am

Air New Zealand has confirmed it will make an announcement at midday today in what is expected to be the partial sale of the airline to Australian rival Qantas.

Air NZ has summoned union representatives to a meeting this morning, and confirmed a trading halt on Air New Zealand shares in Australia and New Zealand until midday.

The airline's chief executive, Ralph Norris, is expected to announce that Qantas will buy up to 25 per cent of Air New Zealand for between A$400 million ($450 million) and A$500 million through the issue of new shares.

Andrew Little, national secretary of the Engineering, Printing and Manufacturing Union, said he would be at the meeting.

"We haven't been told what the purpose of the meeting is ...it was news to me on Friday night to find out that it was possibly to do with a deal with Qantas," he said on National Radio.

"Our view is that Air New Zealand does need a partner like Qantas to ensure its financial security well into the future.

"An issue is going to be job security. We don't see job security with Air New Zealand remaining as it is...it needs to be solidly part of a bigger network."

Air New Zealand confirmed today that its shares will be suspended on the New Zealand and Australian stock exchanges until midday (NZ time) today.

The Government has an 82 per cent stake in Air New Zealand, and will have to approve the deal.

The Commerce Commission and Australia's regulatory authorities also have to give it the go ahead before it can take place.

The cabinet does not have to get Parliament's approval.

The National Party opposes Qantas taking a significant stake in Air New Zealand, and has said it will try to stop it.

"No matter what the terms of sale...we need to be asking if this is in the strategic interests of New Zealand," National's leader Bill English said yesterday.

"Almost no one, except Labour, appears to support the sale."

The sale of shares to Qantas could be the first step towards Air New Zealand becoming part of a big regional airline, the Dominion Post newspaper reported this morning.

It said Singapore Airlines, Qantas and Air New Zealand could be linked together to form a powerful Asia Pacific carrier.

Prime Minister Helen Clark had little to say about the speculation when she was interviewed on Newstalk ZB this morning.

"There has been no proposal put before (Finance Minister) Michael Cullen, who is the shareholding minister," she said.

Parliament is in recess this week and the cabinet is not holding its usual Monday meeting.

"There's no cabinet (meeting) and there's no proposal," Miss Clark said when she was asked whether the Government would discuss it.

- NZPA