Singapore Airlines stake in Ansett 'inevitable'

ADELAIDE - Troubled airline Ansett Australia is facing stormy weather, with the grounding of 10 of its aircraft, reviving questions over safety issues and stirring concern about its market share and reputation.

Analysts expect Ansett parent Air New Zealand to come under pressure to hand over a stake in Australia's second largest airline to Singapore Airlines (SIA) in exchange for capital for new aircraft.

Singapore's flagship carrier already has a 25 per cent stake in Air New Zealand and wanted to buy into Ansett Australia last year.

Responding to Reuters' queries, SIA said it had agreed to lease a Boeing 747-400 to Ansett for two days starting on Monday, to ferry passengers between Melbourne and Sydney.

"We are aware of Ansett's problems and are being kept closely informed," an SIA statement said. A spokesman said the situation would be reviewed day to day.

He declined to comment on whether SIA would be interested in acquiring a stake.

SIA added that it was also sending a small team of four engineers to Melbourne to provide general assistance to Ansett, following a request from parent Air New Zealand.

Analysts say Ansett will also have to work hard and fast on its image, with its market share set to be hit not only by domestic rival Qantas Airways Ltd and two new cut-throat discounters, but also by growing public concern about its safety and reliability.

Peter Harbison, from the Sydney-based Centre for Asia-Pacific Aviation, said he believed it was only a matter of time before Singapore Airlines made a strategic move on to Ansett's share register - finally getting past either New Zealand's foreign ownership restrictions or Air New Zealand's reluctance to share Ansett.

"In purely commercial terms, it's inevitable, but it becomes so complex because this is not a purely commercial issue," Harbison told Reuters. "(The timing of Singapore's arrival) depends on how big that commercial tsunami becomes," he said.

But Air New Zealand Chief Executive Officer Gary Toomey has said the SIA purchase of an Ansett stake is "possible but unlikely."

"They are fully supportive of having a significant shareholding in Air New Zealand and through that a major interest in Ansett," he said.

- REUTERS