Major Air NZ shareholders get warning on Government's priorities

By VERNON SMALL

The Government has moved to reassure the public that a national airline will continue to fly, even if Air New Zealand fails to trade out of its current crisis.

"I have no doubt that at the end of the day there will be an Air New Zealand," Finance Minister Michael Cullen said yesterday.

But it was not in the public interest for the Government to simply be the protector of the major shareholders.

"Our interest is to make sure that 'an' Air New Zealand operates."

The Herald revealed yesterday that the Government has prepared a fall-back option of appointing a statutory manager if the airline cannot trade out of its present difficulties, and might even take a direct stake.

Dr Cullen and Prime Minister Helen Clark are down-playing the risk of statutory management or a direct Government stake, saying they first want to complete an examination of an $850 million rescue package, including a $550 million loan from the Government.

A statutory manager can be appointed by the Government on the advice of corporate watchdog the Securities Commission. Dr Cullen wants to wait for a request from the company before taking that step, and still hopes the company can trade out of its problems.

But sources said the Government was under pressure from the airline to lend the $550 million "up front" rather than merely have it available as a loan of last resort.

Meanwhile, trade union leaders are calling for Air NZ's major shareholders to fund the embattled airline or drop their objections to a Government stake.

Singapore Airlines and Brierley Investments have used provisions in Air NZ's constitution to block the Government from buying into the airline.

Dr Cullen said that "given the alternative" they may have changed their mind.

As part of the rescue package, both Brierley Investments and Singapore Airlines will pump $150 million each into the company.

Council of Trade Unions president Ross Wilson urged them to give "the strongest possible financial support" by increasing that equity injection or allowing the Government to buy in.

After talks with Air NZ chief executive Gary Toomey, Mr Wilson said there had been no discussion of job losses at the airline.

"The survival of the company is still a major concern. But there is no intention to indulge in a cost-slashing exercise because ... there is a feeling that the capacity and the efficiency is there to survive."

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