Qantas to sign all decisions

By JIM EAGLES

A Qantas director will be required to sign any written resolution of the Air New Zealand board if the two airlines consummate their strategic alliance.

A Qantas director must also be present at all board and committee meetings for there to be a quorum.

Those conditions in the agreement were revealed at an investor presentation by Qantas in Australia.

They clearly dated back to Qantas' unhappy previous experience as an Air NZ shareholder, between 1989 and 1996, when an atmosphere of mutual distrust prevailed.

Air NZ's management used a range of tactics, including holding secret meetings, to stop the Qantas directors finding out about commercially sensitive information.

Air NZ chief executive Ralph Norris acknowledged that the provision requiring a Qantas director to be present for there to be a quorum was there at Qantas' insistence because "they want some protection for themselves".

He said: "They are putting a lot of faith in Air NZ, in giving us something between 11 and 15 per cent of their business to run, so it's only reasonable to expect them to want to be there when decisions are made."

Norris said he had no problem with that because "we're obviously not going to go off and run board meetings without Qantas there".

The announcement that, in addition, a "Qantas director will be required to sign any written resolution of [the] Air NZ board" initially seemed to leave him non-plussed.

But he emphasised that it did not mean all board decisions had to be signed off by Qantas.

"Resolutions will be carried by majority.

"There's no veto in this arrangement. It just means that if there's a written resolution, a Qantas director will be required to sign it ... just to show that Qantas was there."

Those two safeguards for Qantas were among several points which highlighted a somewhat different emphasis given to the partnership agreement on the other side of the Tasman.

The briefing notes, signed off by Qantas general counsel Brett Johnson, seemed designed to reassure Australian investors that their national carrier would be able to exercise plenty of control.

For instance, immediately after reporting that Air NZ would manage the commercial aspects of the alliance, they go on to record that Qantas would "second staff to assist Air NZ's management".

Norris said the airlines had talked about having "some lower level management secondees into Air NZ" who would "be here to act as the glue in the alliance arrangement".

"But," he said, "certainly all management control is Air NZ and these people ... are certainly not here to manage the operation".

The Australian version also underlined the fact that the Air NZ management would be "supported by" a strategic alliance advisory group with three members from each airline which would review and endorse the alliance's business plans and budget, and monitor its performance and its "capture of organisational opportunities".

Despite the apparent nervousness of Qantas, Air NZ would make far the biggest contribution to the alliance.

Qantas' transtasman, New Zealand domestic and Auckland Los-Angeles routes would account for 30 per cent of the capacity, while Air NZ's services represented the rest.

Under the profit-sharing arrangement, 60 per cent of the benefits would be divided according to the capacity each airline had on the shared routes, with the remaining 40 per cent split 50-50.

That suggested that, initially at least, Air NZ would get 62 per cent of the profits while Qantas would get 38 per cent. Norris said the seemingly disproportionate share going to Qantas was because the Australian aviation market gave higher yields than the New Zealand market.