NATIONAL NEWS
WEDNESDAY, 05 SEPTEMBER 2001
N A T I O N A L N E W S S T O R Y
Air NZ rescue package falters
05 September 2001
By NICK VENTER and ROELAND VAN DEN BERGH
A decision on the future of Air New Zealand has slipped back
because of concern over the viability of the rescue package
being put together for the airline.
Urgent talks were taking place last night between Air New
Zealand and 25 per cent shareholder Singapore Airlines to find a
way of keeping alive the deal which would allow Singapore
Airlines to lift its stake from 25 per cent to 40 per cent.
Prime Minister Helen Clark said on Monday that the Government
hoped to announce some decisions before Finance Minister
Michael Cullen left for an Apec finance ministers meeting
tomorrow. But sources said it was unlikely there would be any
announcements today.
The Government and Singapore Airlines are understood to have
been close to agreement on the deal. But progress stalled
yesterday because of doubts over the sustainability of the
proposal. Qantas began due diligence on Air New Zealand last
week.
The deferral could fuel speculation that Air New Zealand needs a
bigger cash injection than previously flagged.
Air New Zealand is expected to announce losses of about $200
million next week, and has said it needs $1 billion to upgrade its
ailing subsidiary, Ansett Australia.
Company spokesman David Beatson said he could not comment
on what reasons the Government might have for not proceeding
with an announcement today.
The directors were "comfortable" with market predictions of a
$200 million loss, he said.
In the latest blow for Air New Zealand, British tycoon Sir Richard
Branson said yesterday he had decided against selling his Virgin
Blue airline to Ansett Australia.
Ansett, which has a 40 per cent market share, needs Virgin Blue
to compete against Qantas on equal terms. The cut-price airline
has secured a 5 per cent share of the Australian market in 12
months and is growing.
Sir Richard said Ansett was bleeding A$1 million (NZ$1.2 million) a
day.
One market commentator said Singapore Airlines might not be
interested in increasing its stake in Air New Zealand without
Virgin Blue as part of the equation.