Singapore Airlines to sell stake in Air NZ

10.20am

Air New Zealand today requested a trading halt in its share trading after Singapore Airlines said it was selling its 6.5 per cent stake in the Government-controlled airline by way of a bookbuild tender.

The trading halt will remain in place until 10am tomorrow or earlier if the bookbuild is completed sooner. So-called bookbuilds allow financial institutions to bid for quantities of stock at different prices before a final price is set based on the bids.

Air NZ shares closed yesterday at $1.68, having trading between $1.64 and $2.70 in the last year, adjusting for the share consolidation.

Singapore (SIA) has had an extremely bumpy ride on Air NZ's share register and at the time of Air NZ's virtual collapse in September 2001, it owned a quarter of the company.

It was mainly interested in Air NZ's stake in then Australian number two airline Ansett Australia, but that airline's collapse in 2001 precipitated big problems at the parent airline.

SIA lost hundreds of millions of dollars on its investment as its stake in Air NZ was reduced to 5.5 per cent from 25 per cent by the Government's $885 million bailout in 2001.

SIA may still be keen on exposure to Australia and the decision of British Airways to sell its 18.25 per cent stake in Qantas may be the opening the giant Singapore airline may be wanting.

Air NZ is seen as less attractive to SIA, with regulators and courts rejecting an alliance between Qantas and Air NZ, whereby Qantas would have owned 22.5 per cent of Air NZ.

Air NZ shares have been sold heavily over the last month on news of the BA sale of its Qantas stake and on concerns about the impact of higher fuel prices.

SIA wanted to bail out Ansett and Air NZ by taking its stake in the airline to 49 per cent, but that deal was rejected by the Government.

After Ansett's collapse, SIA rejected a deal whereby it and then 30 per cent owner Brierley Investments would each inject $150m and the Government $550m to prop up Air NZ.

In the end, the Government bailed out the airline on its own with an $885m package that heavily diluted SIA's stake.

SIA originally paid $3/share for its stake in the airline before this year's five-for-one consolidation -- the equivalent of $15/share on a post-consolidation basis.

It's 39 million shares are worth $65m at today's prices compared with the approximately $585m the airline paid for them.

- NZPA