Air NZ's foreign ownership cap to go

By FRAN O'SULLIVAN assistant editor

The Government is expected to ease restrictions on direct foreign airline ownership of Air New Zealand.

The move would clear the way for Singapore Airlines to raise its stake above the present Government-imposed 25 per cent threshold, enabling recapitalisation of the national flag carrier. Alternatively, it would let the rival Qantas bid proceed if Singapore was not prepared to support its Air New Zealand investment.

Finance Minister Michael Cullen and Transport Minister Mark Gosche are expected to impose tough conditions if they recommend a relaxation of the ownership cap.

Under consideration are cast-iron assurances that Air New Zealand will continue to operate as an independent airline under its own brand.

The ministers would also stipulate that international routes important to New Zealand business and tourism must not be sacrificed to the main shareholder's own aviation interests.

Dr Cullen and Mr Gosche, who together hold the Kiwi or Golden share in the airline on behalf of the Government, have the power to request that such conditions be written into an amended Air New Zealand constitution.

Last night, Dr Cullen said the Government had not yet received a formal approach to lift the ownership cap. Until an approach was made, he said, no formal response could be given.

Air New Zealand acting chairman Jim Farmer and independent director Ralph Norris yesterday met Qantas chief executive Geoff Dixon and his team in Auckland.

Mr Dixon provided further details about the rationale behind the Qantas proposal to acquire Singapore Airlines' stake in the airline in return for the latter gaining Ansett Australia.

But Air New Zealand spokesman David Beatson said Qantas had yet to table a firm proposal or provide answers to the list of questions the independent directors posed more than a week ago.

Singapore Airlines has not made any formal overtures to the independent directors.

But it has indicated it will want concessions from Air New Zealand if it lifts its stake above the 25 per cent level and leads the recapitalisation.

The main concession, yet to be resolved, concerns how much influence Singapore Airlines would have over Ansett Australia's fate.

Air New Zealand's independent directors are studying a number of ownership options in preparation for their board meeting this month.

Concentrating directors' minds is the July 1 deadline for the new takeovers law. Under this legislation, companies moving beyond a 20 per cent shareholding will be required to make an offer for a majority stake.

This restricts the options for large shareholders such as Brierley Investments and Singapore Airlines.

Mr Beatson said Air New Zealand had received expressions of interest from New Zealand individuals, investors and institutions in acquiring Brierley's 30 per cent stake - but no new Zealand-based consortium had emerged.

The Business Herald reported last week that Auckland businessman Stephen Tindall had been mentioned as a possible buyer.

Mr Tindall said he was aware of moves to get leading New Zealand investors on board but played down his own involvement, saying "headlines won't help."

Last night, parliamentary sources said investment banker Lloyd Morrison was assessing institutional support for taking up the Brierley stake.

Brierley has said it wants to quit its shareholding, but not at any price.

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