Air NZ's autonomy to be guaranteed under Qantas deal

By FRAN O'SULLIVAN

Air New Zealand is adamant it will preserve its autonomy if the proposed Qantas bid for a 25 per cent stake succeeds.

Managing director Ralph Norris says the company is not going to enter any arrangement that is not in the best interests of Air New Zealand.

His comments came in the wake of claims that a deal had already been struck.

The airline chief also denied that Air New Zealand clients would lose their airpoints in the event of a sale.

The claims have taken the edge off the airline's preparations to unveil a new fare structure next week for its Air New Zealand Express service.

Herald inquiries confirm the sale negotiations have been under way for four months. But no deal has emerged.

The company is due to unveil its annual result for the year on August 28.

Plans for a cash issue open to all Air New Zealand shareholders are expected to go ahead this year.

Qantas chief executive Geoff Dixon has presented his proposal for a 25 per cent stake as a "partnership between two equals".

Mr Dixon has told the key players that the deal would bring big benefits for New Zealand's flag carrier and its wider national interests.

The proposal envisages a 25 per cent cornerstone shareholding accompanied by a long-term strategic alliance agreement. Qantas is not seeking a higher stake and Air New Zealand would remain independent.

Air New Zealand has insisted it must preserve its own growth opportunities.

Qantas would be a minority shareholder, with no understandings it would ever be more than that.

Negotiators have to fashion an agreement which meets national interest criteria and stiff regulatory hurdles on both sides of the Tasman before it can be presented to the Air New Zealand and Qantas boards.

Shareholding ministers would then decide whether to proceed.

Teams from both airlines, aided by merchant bankers and legal advisers, are trying to bring a deal together within the next few weeks.

Cameron & Co and PA Consulting - which advised the Crown during the lengthy negotiations leading to the acquisition of an $885 million Government stake in the airline last year - are acting for Air New Zealand.

Macquarie Bank and legal firm Minter Ellison are working for Qantas.

Brokers Salomon Smith Barney estimate that a 25 per cent stake in Air New Zealand would cost Qantas $A400 million ($465 million).

Finance Minister Michael Cullen has said the Government will pump in $150 million capital by June 30 next year if the airline needs it.

Among the likely guarantees in a national-interest package are:

* Protection of New Zealand tourism.

* Provision of feeder traffic from Australia.

* Protection and future enhancement of Air New Zealand's existing route structure.

* Maintenance of direct international services from New Zealand.

* Engineering/maintenance "centres of excellence" at Auckland and Christchurch.

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