Spurned Qantas tries new approach

By DANIEL RIORDAN aviation writer

Qantas Airways has written to the Government saying it would settle for 25 per cent of Air New Zealand if 30 per cent shareholder Brierley Investments could be sidelined.

Qantas chief financial officer Peter Gregg was in Auckland yesterday and told the Business Herald his airline was not giving up on Air New Zealand, despite the national carrier's directors choosing increased investment by Singapore Airlines as their preferred option.

Air New Zealand officials are negotiating with the Government about achieving that.

"We wrote to the Government on Monday, confirming we're still interested and setting out why we think our proposal is the most appropriate one for the region's aviation industry," said Mr Gregg.

"We'd only be entitled to buy the B shares that Singapore owns. We do have a conundrum in that we would need to see Brierley come off the register because we'd want to be a significant shareholder in our own right.

"To facilitate the removal of Brierley from the register, we'd have to put in place some mechanism to allow that to occur."

Singapore has said it is not interested in selling its Air New Zealand shares, so what makes Qantas hopeful that it is still a contender?

Mr Gregg said that until the New Zealand and Australian Governments had received formal proposals and agreed to them, Qantas believed it was still very much in the frame.

"We know Brierley wants to exit Air New Zealand and we would facilitate that exit. We'd become the cornerstone investor, which is important for both parties. It removes the uncertainty for Air New Zealand investors created by Brierley's block of shares."

He said Government officials had been briefed on the idea but no formal proposal had been put.

"It's not our position to do so until the Air NZ board asks us to do so."

Air New Zealand wants to issue new shares to Singapore at $1.31 each to help finance its capital needs.

If Singapore increases its stake from 25 per cent to 35 per cent, Air New Zealand will raise $151 million. If Singapore takes 40 per cent, $248 million will be raised. A 49 per cent stake will raise $466 million.

If the Government refuses to lift foreign airline ownership limits - and so far it has given no indication it is prepared to change the rules - Air New Zealand's Plan B is to sell its troubled subsidiary Ansett Australia to Singapore.

www.nzherald.co.nz/aviation

Air wars - the cast list

www.nzherald.co.nz/travel