Virgin gives Singapore more time

By GEOFF SENESCALL

Virgin Australia is understood to have extended to mid-April the deadline for Singapore Airlines to join its fledgling operation.

This keeps alive a possible linkup between the two airlines, as the option was to have lapsed at the end of March.

It gives Singapore another choice for entering Australia's $A7 billion ($8.6 billion) domestic aviation market if relations with Brierley Investments disintegrate completely.

Singapore had been poised to buy Brierley's 25 per cent shareholding in Air New Zealand on March 15. Despite both chief executives being in Wellington on that day, no deal was signed.

Since then, Brierley has backed off from any negotiations until Air New Zealand has completed the acquisition of the remaining 50 per cent shareholding in Ansett Australia. This is expected to be done by the end of this month.

Brierley, however, has kept the door open for Singapore, saying it is still the preferred partner for Air New Zealand. This comment was also made in light of Qantas revealing its hand to say it, too, had held talks with Brierley over its Air New Zealand holding.

While Virgin wants Singapore aboard, it appears it will enter the Australian market with or without the Asian carrier.

Virgin, owned by British billionaire Sir Richard Branson, plans to start a cut-price domestic service ahead of the Sydney Olympics in September. It has reportedly bought 10 Boeings to tackle the duopoly of Qantas and Ansett.

Since the startup announcement in November, around $A1.6 billion has been wiped off the market capitalisation of Qantas.

British Airways, which fought with Sir Richard for European and transatlantic market share in the 1990s, is the largest shareholder in Qantas, with a 25 per cent stake.

A tie-up between Virgin and Singapore in Australia would follow the Asian carrier's purchase last year of a 49 per cent stake in Sir Richard's European operation.

* Qantas chief executive James Strong said on Australian television yesterday the airline would be prepared to pay up to $A1 billion for a stake in Air New Zealand.

Meanwhile, Bloomberg quoted London's Financial Times as saying that British Airways, Europe's biggest airline, and American Airlines, the second-largest US carrier, resumed talks on forming a transatlantic alliance that were abandoned last year.

Senior officials from the two companies met in New York last week to discuss a joint venture for routes across the North Atlantic and other destinations in their networks, the news service said. Earlier attempts to form such an alliance were called off in July after US, British and European competition authorities said the two airlines would have to reduce operations at London's Heathrow airport.