Government wants more details on airline proposal

The Government wants more information on a proposed Qantas Airways/Air New Zealand tie-up before deciding whether to allow such a deal.

Australia's Qantas Airways said today it was considering a plan to buy a significant stake in the New Zealand carrier, as part of a proposal for Air New Zealand to sell domestic Australian carrier Ansett Australia to Singapore Airlines.

Air New Zealand said the proposal was for Qantas to buy stakes from its two biggest shareholders, Singapore Airlines with 25 per cent, and Brierley Investments Ltd with 30 per cent.

Transport minister Mark Gosche said the Air New Zealand board had written to him about the proposal and he expected to get more information this week.

Mr Gosche said there were both domestic and international considerations.

"What the government has to look at are the competition issues. It also has to look at international landing rights," he told reporters.

"We have an open skies agreement so obviously that treats Australasian airlines the same, so what we are looking at is the other implications of the deal," Mr Gosche said.

The open skies policy allows New Zealand and Australian airlines to fly in each other's markets without restriction.

New Zealand government policy limits a single foreign airline to 25 per cent ownership of a New Zealand international airline. Foreign airline ownership can total a maximum of 35 per cent.

Qantas can not buy a significant stake in Air New Zealand without permission of the government - which holds a golden share in the New Zealand carrier to enable it to protect New Zealand's international aviation rights.

Air New Zealand's shareholder structure splits the shares into A shares (51 per cent), which can only be held by resident New Zealanders, and B shares (49 per cent) which have no such limitation. After selling its B shares to Singapore Airlines last year, Brierley's 30 per cent shareholding in Air NZ is entirely in Air New Zealand A shares.

Brierley set up a New Zealand-based company to hold its Air New Zealand assets when the investment company shifted to Singapore last year.

Air New Zealand's A shares jumped as high as $1.10 today before easing a little to close up nine cents at $1.09. Turnover was $1.3 million. Its unrestricted B shares rose 14 cents to $1.51 on volume of $4.1 million.

Qantas has twice before owned shares in Air NZ - when it was first formed as Tasman Empire Airways Ltd (TEAL) in the 1940s and again when the then state-owned airline was privatised in 1989.

The proposal was made late this morning and prompted Sir Selwyn Cushing, to stand aside from his chairmanship of both Air New Zealand and Brierley Investments.