Air NZ takes its time on Qantas

By FRAN O'SULLIVAN AND NZPA

Air New Zealand has dismissed the bid by rival Qantas to buy 55 per cent of its shares as just one of several possibilities being considered.

Dr Jim Farmer, chairman of a committee of independent directors set up by Air NZ to consider the Qantas proposal, bluntly told a press conference in Auckland yesterday evening, "It's just another option."

Dr Farmer added: "We're under no pressure to complete the process of assessing this proposal and the other options available within any specific timeframes.

"This Qantas proposal is simply one more proposal to add to the range of options available to Air New Zealand to chart the medium-term future of the company.

"All options are on the table and being examined."

Only after the Qantas scheme was fully explored would any approach be made to the Government to discuss Air New Zealand's ownership, said Dr Farmer.

"We won't talk to the Government in a meaningful way until we've actually got something to talk about."

The same business-as-usual message came from chief executive Gary Toomey, who took the opportunity to emphasise, "Air New Zealand is not strapped for cash.

"It has more than adequate cash to meet its ordinary requirements."

Mr Toomey acknowledged the company was "exploring funding options to support its medium-term development programme."

But he reiterated an earlier statement that the company would have $1 billion in cash available by the end of the company's financial year on June 30.

Before the move by Qantas, the company had employed Salomon Smith Barney to look at financial options and its report was due in a few weeks.

The proposal from his former Qantas colleagues - to buy the stakes held by Brierley Investments (30 per cent) and Singapore Airlines (25 per cent) - was, Mr Toomey said, no more than "an interesting addition to the range of medium-term development options" that the new management team had been considering.

Mr Toomey acknowledged that the company had given some consideration to approaching the Government for "transitional funding" to get around the foreign equity constraints, but said this option had not been put to the board.

Responding to questions, he declined to elaborate on the other options and would not say where the Qantas proposal stood in terms of priorities.

The Australian Financial Review yesterday reported Qantas chairwoman Margaret Jackson as saying the airline - which had been unable to generate any synergies from the 20 per cent stake it held in Air New Zealand from 1989 to 1997 - wanted at least 49 per cent of Air New Zealand.

"Unless we could participate with a higher [stake], we would not be interested at 25 per cent," she was quoted as saying. A 49 per cent stake would be a "reasonable place to start."

However, a Qantas official rang the Business Herald to say that the chairwoman had been misquoted and the airline would initially be prepared to accept a substantially lower stake than 49 per cent.

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