Ansett left up in air over Qantas moves

By ROB O'NEILL

Ansett New Zealand management and its new owners yesterday refused to discuss Qantas Airways' manoeuvres to acquire Brierley Investments' key 47 per cent stake in Air New Zealand.

They also declined to comment on the effect a Qantas buy-in would have on Ansett NZ's relationship with the Australian airline.

But a spokeswoman for Qantas said the relationship between Qantas and Ansett NZ was of the "affiliation" variety rather than contractual, which could leave the airline exposed if Qantas succeeded in gaining Brierley's stake and built a relationship with Air New Zealand.

Any deal between Qantas and Brierley could undermine existing passenger referral and frequent-flyer arrangements between Qantas and the now locally owned domestic airline.

"We're obviously not commenting on that," said David Belcher of merchant bankers Clavell Capital, which constructed the deal.

Mr Belcher said more detail of Ansett NZ's commercial arrangements would be announced in May.

He pointed to comments yesterday from Qantas deputy chief executive Geoff Dixon, who said his airline was looking for a more full-blooded commercial relationship with Ansett NZ.

Meanwhile, Qantas chief executive James Strong has confirmed Qantas' interest in Air New Zealand.

Yesterday, Brierley suspended talks on the sale of its stake until the completion of Air New Zealand's purchase of Ansett Australia, expected by the end of next month.

Brierley's previously moribund share price has lifted from 35c at the beginning of this month to close at 47c yesterday.

Ansett NZ's chief executive, Kevin Doddrell, chairman Ken Cowley and investors Greg Lancaster and Sir Clifford Skeggs all declined to comment or to elaborate on details of referral arrangements.

Investors Alan Gibbs, Trevor Farmer, Chris Coon and Ian Hendry were not available for comment.

The Qantas spokeswoman said the relationship with Ansett NZ was an ongoing commercial arrangement providing connecting international and domestic services and including membership of Qantas' frequent flyer programme.

"As far as I'm aware, there is no contract that expires at a particular time."

Mr Belcher did tell the Business Herald that most of the measures required to turn Ansett New Zealand around had already been taken as a prerequisite of the deal.

"As part of this transaction, the leases have been renegotiated, the engineering arrangements and so forth have all been redone. The investment group is very comfortable with the third-party contracts going forward."

Ansett NZ's manager of public relations, John Cordery, said four-year leases had been renewed for the existing fleet, including eight BAe 146 jets and five Dash 8 turboprops.

A new 50-seat Dash 8 will next month replace one of the four 40-seaters now in service.

One analyst said the capital-intensive nature of the business, ongoing deregulation and the size and maturity of the New Zealand market limited growth opportunities.

Returns are hard to achieve as airlines are subject to the whims of the market, especially with regard to tourist numbers and fuel prices. Also, the product has to be continually upgraded.