Canberra gives Qantas a boost

By VERNON SMALL deputy political editor

Qantas' flagging bid for a cornerstone stake in Air New Zealand has won a reprieve after Anzac ministers agreed to set up a working party to look at the future of the Australasian aviation market.

Australian Deputy Prime Minister John Anderson threw Canberra's weight behind Qantas at a meeting yesterday with Finance Minister Michael Cullen and Transport Minister Mark Gosche, where he questioned the impact of a rival Singapore Airlines (SIA) move.

Qantas wants to buy SIA's 25 per cent stake in Air NZ as part of a deal under which Air NZ would sell its Ansett Australia subsidiary to SIA.

But Air NZ wants the Government to approve SIA's plan to lift its 25 per cent stake to 49 per cent as a way of recapitalising cash-hungry Air NZ and Ansett.

Mr Anderson said he welcomed a direct SIA investment in Ansett. But he was concerned that SIA buying into Air NZ would produce an unhealthy imbalance in the global, regional and Australian aviation markets over the next 20 years.

"We also want to see Qantas not confronted by a behemoth at some stage in the future. Singapore, Air NZ and Ansett in the longer run would be potentially a very large business indeed."

He said the Australian Government believed the Qantas proposal must be fully developed and evaluated.

It needed to show how its plan could satisfy competition watchdogs in both countries, enhance Air NZ's route structure and maintain employment in New Zealand.

National's transport spokeswoman, Belinda Vernon, said the joint ministerial committee, coming after Monday's announcement of a six-member ministerial committee on the issue, showed the Government was rudderless over the matter.

She said Ansett was fundamental to securing Air NZ's future, and Dr Cullen should not allow Australian agendas to "push in".

In a joint media statement, approved by Prime Minister Helen Clark and her Australian counterpart, John Howard, the three Anzac ministers said they recognised each others' interests in ensuring long-term strength and competitiveness in both aviation markets.

Dr Cullen has appointed Rob Cameron from Cameron and Co, a merchant bank which has been providing advice to the Treasury on the aviation industry, as lead negotiator.

He said possible changes to Air NZ would involve regulatory approvals from both sides of the Tasman.

A decision was desirable before Air NZ released its financial results in early September. This would disclose the extent of the damage caused by the investment in Ansett.

"It is important for them and for the markets that there is some clear road forward before, or at, that time," said Dr Cullen.

Resolving the rival bids, with "three sovereign countries and four corporates" involved, was very difficult.

SIA has said it is not prepared to sell its 25 per cent of Air NZ, effectively sidelining the Qantas proposal.

But Mr Anderson said Singapore "would be very interested in the views of the Governments in the region about how we see a strong aviation policy unfolding in the region".

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