Air NZ warns off predators

By DANIEL RIORDAN

Air New Zealand's deputy chairman, Dr Jim Farmer, QC, has warned the Government against allowing Qantas Airways to take a cornerstone stake in the national carrier.

Speaking yesterday at Air New Zealand's often heated annual meeting in Auckland, at which shareholders approved the Government's $1 billion-plus rescue package, Dr Farmer said Qantas' earlier attempt to buy into Air New Zealand would have sidelined the airline to being a small domestic and Pacific Islands carrier and would have had a major negative impact on New Zealand's national interest.

"Short-term gains from a Qantas buy-in will have a long-term cost that this country simply cannot afford and would make a mockery of the reasoning that compelled the Government's decision to save Air New Zealand from statutory management or liquidation."

Qantas, which yesterday announced it would be expanding its New Zealand services, is believed to also be keen to take a stake in Air New Zealand, possibly by buying the 5.5 per cent stake held by BIL Investments.

Dr Farmer spent almost a third of the three-hour meeting detailing the efforts of the airline's board and management to secure a future for the company that included its Ansett subsidiary. Those efforts failed, forcing Air New Zealand to write off its investment in Ansett and necessitating the Government's rescue package .

Most shareholders gave Dr Farmer a positive reception then voted to approve the deal.

The Government will take $585 million in new equity at 27c a share, which in addition to an earlier $300 million loan, convertible to preference shares at 24c each, gives it an 82 per cent stake in the airline.

Of the A shareholders, 96.4 per cent voted in favour of the deal, and 98.7 per cent of B shareholders were in favour.

Shareholders also approved the merging of the A and B shares and reappointed directors Sir Ronald Carter and Ralph Norris. Act MP Stephen Franks' symbolic tilt at the board was defeated, but not before he warned shareholders to be vigilant as the company goes forward under its new majority owners.

Executive director Roger France said the airline was still facing very difficult trading conditions, with November figures particularly disappointing.

International passenger loads were down on projections, as was the airline's domestic yield. Although a decrease in fuel costs was helping, forecasts to the end of the year indicated that cost benefits might not be great enough to offset declines in passenger revenue.

Small shareholders and their advocates had plenty to say about the airline's road to near meltdown.

Shareholders Association chairman Bruce Sheppard awarded a "Golden Glob" to Sir Selwyn Cushing, the airline's former chairman and chief architect of the ill-fated Ansett purchase. Sir Selwyn and the "BIL Bunch" had frustrated Singapore's desire to own 50 per cent of Ansett, pushed through the Ansett purchase without proper due diligence and then sold down its stake to Singapore at a decent price, said Mr Sheppard.

It was a "commendable performance of self-interest and wanton disregard for anyone else's interest."

The Government ran a close second as villain, said Mr Sheppard. It had declined to back the board's call for a rights issue, prevaricated over Singapore's offer to spend more equity at $1.31 a share until it was withdrawn, and had ended up nationalising a prime asset at rock bottom prices.

"Who says Labour's not good at business?"

Dr Farmer, who as acting chairman led the airline through months of tortuous negotiations, was a hero for his success, against all odds, in saving at least 18 per cent of the airline for shareholders.

Another prominent shareholder advocate, Oliver Saint, agreed.

The doyen of shareholder advocates, Max Gunn, had few kind words for Sir Selwyn.

"I blame primarily Sir Selwyn Cushing who, like Osama bin Laden, is out of our clutches. And I blame the compliant board of puppets ... You are guilty, and you ought to all be ashamed of yourselves and you should make thorough reparations to the shareholders."

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