Wealthy airline spreads its wings

By YOKE HAR LEE

Singapore Airlines' acquisition of a 49 per cent stake in Richard Branson's Virgin Atlantic does not mean it will not still try to buy into Ansett Australia, says an Australian analyst.

And, says the Sydney-based Centre for Asia Pacific Aviation Study, Air New Zealand could also be a target for the cash-rich Asian airline.

In a report, Singapore Inc Marries Virgin Inc, the centre says: "A 50 per cent stake in Ansett still looks probable. Even Air New Zealand could be attractive."

But Singapore Airlines would be highly unlikely to have a share of Ansett Australia and maintain its Virgin interest in Australia.

The Singapore Government-owned investment arm Temasek still has a small holding in Brierley Investments, which in turn owns 47 per cent of Air New Zealand.

This would deliver Singapore the "domestic" market it can never have at home, the report said.

The centre managing director, Peter Harbison, said: "We still believe Singapore and Ansett will do a deal."

He expected Singapore Airlines to buy at least one of Brierley, Air New Zealand and Ansett.

"There is just too much logic on its side."

Singapore Airlines' public affairs manager, Rick Clements, last month denied a Melbourne report that the airline had reopened negotiations with Ansett Australia or Air NZ.

Aviation analysts still expect Singapore Airlines and Brierley/Air New Zealand to resolve their differences on Singapore's foiled attempt to buy 50 per cent of Ansett.

Virgin Airlines' announcement in December that it would start a no-frills service in Australia has given rise to the possibility that Singapore might develop the Australian market with Virgin.

Singapore's long-term ambition is to have a global operation but it has had bad luck so far - the latest being its plan to buy 50 per cent of Ansett Australia.

In 1992, it failed in a bid to buy 25 per cent of Qantas, losing to British Airways. In 1996, it had a falling-out with India's Tata Group in a venture.

And last year, it lost its joint bid with Lufthansa to acquire 30 per cent of South African Airways.

The report by the Centre for Asia Pacific Aviation Study says that after the Virgin purchase, Singapore Airlines will still have around $S3.5 billion ($4 billion) in cash.

It was still seeking acquisitions, particularly in lower-cost areas with high growth potential.