Cushing says price not issue in Ansett deal

By GEOFF SENESCALL

Air New Zealand chairman Sir Selwyn Cushing has indicated that price is no longer an issue in its negotiations with Rupert Murdoch's News Corp for its 50 per cent stake of Ansett Australia.

At a media briefing in Auckland yesterday to announce Air NZ's interim results, Sir Selwyn said: "[Price] would appear to be capable of agreement."

Air New Zealand had hoped to announce the purchase of the other 50 per cent of Ansett with its results.

"But documents need two parties and we haven't got the other signature just as we talk."

But Sir Selwyn was confident of being able to announce the buy this week.

The deal did not involve Singapore Airlines, which was negotiating last year with News Corp to buy its Ansett stake for $A500 million.

Air New Zealand effectively scuttled the deal by not agreeing to waive its pre-emptive rights over the stake.

But Sir Selwyn did not rule out trying to do a deal with the Asian airline at some point.

"They are not right in it and they are not right out of it. It is much better to have a fewer number of parties involved at the vital time. It just makes your chance of success much better," he said.

As for financing the purchase, Sir Selwyn pointed to the airline's balance sheet, which showed cash of $341 million - "not a bad start," he said.

While Air New Zealand would not talk about price, analysts believe that the deal will be for between $A600 million and $A750 million.

Before Sir Richard Branson announced that he intended to bring his cut-price airline Virgin into Australia, News Corp had been reported as wanting about $A900 million for its Ansett stake.

Air New Zealand chief executive Jim McCrea said that while the airline was taking Sir Richard seriously, the market had overreacted in marking down airline values in response to Virgin.

"We [Qantas, Ansett and Air New Zealand] ourselves are very effective competitors."

Air New Zealand intends to merge its operations with Ansett to create an Australasian airline that will be among the 20 largest in the world.

Mr McCrea said that even though Ansett was slightly larger than Air New Zealand there was no specific intention to move head office to Australia.

Under regulations "Ansett International must be resident in Australia and Air New Zealand international must be resident in New Zealand.

"I think there is room for flexibility as to how things will end ... because basically what you are talking about is a fully transnational business."

Meanwhile, speculation in the market suggests that senior management issues at Ansett relating to an Air New Zealand purchase have yet to be resolved.