Merge with Qantas: ex-Air NZ man

LONDON - Ray Webster, who spent 27 years at Air New Zealand, may be poking a hornet's nest, but the chief executive of Europe's second biggest discount airline, easyJet, says the national carriers of Australia and New Zealand should be merged.

Qantas, 25 per cent owned by British Airways, and rival Singapore Airlines, which holds 25 per cent of Air New Zealand, are both lobbying the New Zealand Government for approval of their separate plans to help the capital-depleted Air NZ.

Mr Webster, a New Zealander whose last position at the country's carrier was as head of strategic planning, argues that a strengthened link between Air NZ and Singapore Airlines (SIA) is "much more tenuous" than a link with Qantas.

The easyJet prospectus discloses Mr Webster has an agreement with Air NZ to provide consultancy services each year in return for pension contributions and free flights to New Zealand.

Mr Webster, chief executive of easyJet since March 1996, has said: "Singapore Airlines has got a very clear strategy of moving people through Singapore.

"Where they fly to is not important as long as they fly on a Singapore aeroplane ... I think Air New Zealand will just be another component and I don't think it will be a strategic component.

"I think the Qantas-Air New Zealand link is much more strategic and would bring significant benefits for the long term, but the trouble with this is one of parochial politics."

Air NZ is opposed to the Qantas plan, which involves buying out a major Air NZ investor - Brierley Investments - and SIA, which would then buy Air NZ's Ansett, Australia's loss-making second-ranked domestic carrier behind Qantas.

Under the SIA plan, it would lift its stake in Air NZ and support its capital raising.

But New Zealand must change its foreign ownership limits to allow a stake above 25 per cent. The airlines are also limited to stakes below 50 per cent so as not to contravene bilateral air traffic landing treaties between New Zealand and other sovereign states.

Finance Minister Michael Cullen told a Singapore business council on Wednesday that it was probably "very, very difficult" to back Air NZ over the SIA proposal.

Dr Cullen said that a key issue in breaking the impasse was how important Ansett was to Air NZ.

The Government also has concerns about the impact of relaxing its foreign ownership rules on the domestic and international competition among carriers and whether the strategic interest of New Zealand as a tourist destination would be affected.

Mr Webster said: "If you look at the global network side, I believe Qantas and Air New Zealand should join into one airline and form a strong Australasian entity. I think there is a very close alignment of interest between these two airlines. By putting the two airlines together I don't think either country is going to be terribly affected one way or another."

- REUTERS

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