Air NZ stalls for time over cash bailout

By FRAN O'SULLIVAN assistant editor

Singapore Airlines' push for a 49 per cent stake in Air New Zealand is again "on the table" as negotiations toughen with the Government over the terms of the forthcoming bailout.

Discussions are also taking place over the ownership of troubled Ansett Australia, Air NZ's 100 per cent-owned Australian subsidiary.

But the Government has made it clear that it expects Brierley Investments - the airline's largest shareholder - to contribute to the recapitalisation of the airline by supporting a subsequent rights issue.

The Air NZ board, which met in Auckland yesterday, has signed off a five-year business plan for the national flag carrier and refined its recapitalisation requirements.

The cash-hit airline faces losses of around $200 million for its June 2001 year and needs a big capital injection to help finance its Australian fleet requirements.

However, the losses will skyrocket if Air NZ is forced to write down the value of Ansett Australia when it unveils its result on September 13.

Both the Government and Air NZ yesterday admitted that there was no way a deal could be forged in time for next Monday's cabinet meeting.

Finance Minister Michael Cullen and Air NZ have each indicated more negotiating time is needed to conclude an agreement that is satisfactory to all parties.

Air NZ said last night that the outcomes from its board meeting were to be conveyed to the Government.

"The board expects there will be further discussions with interested parties," a brief statement said.

"The company is hopeful that the Government will be in a position to make its decision before the Air New Zealand Group's results are announced."

A representative for Dr Cullen said that as the Minister of Finance would be out of New Zealand from September 6 to September 11, it was unlikely a Government decision would be announced until his return.

Dr Cullen would be at the Asia Pacific Economic Co-operation forum ministerial meeting but was expected to be in close telephone contact with his advisers.

But there was still no guarantee the proposal would be ready to be settled at the September 12 cabinet meeting.

Early this week, Air NZ acting chairman Jim Farmer said the company had delayed its 2001 announcement because the precise details of its proposed recapitalisation programme would require more time to finalise than originally thought.

Dr Cullen told Parliament that the Government's overriding interest was to ensure the airline survived, was strong and viable, could promote the brand and offered competition domestically and internationally.

The Government is reluctant to become a direct shareholder in Air NZ but may underwrite a rights issue for it.

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