Singapore Airlines KrisFlyer - Singapore Airlines Wants More Stake
The government was warned Friday that Australia's second largest airline, Ansett, is likely to collapse unless Singapore Airlines is allowed to increase its stake in Air New Zealand.
Singapore Airlines chief executive Cheong Choong Kong met with Prime Minister John Howard to discuss SIA's bid to increase its stake in Air New Zealand. The move could make SIA the major shareholder in Air New Zealand, which owns Ansett.
Air New Zealand presented its case to the government Thursday for Singapore Airlines to take a larger stake in the national carrier after warning it must get outside help.
Air New Zealand chief executive Gary Toomey gave the warning after Finance Minister Michael Cullen repeated the state's view Wednesday that it will be difficult for the government to raise a 25 percent limit on foreign airline ownership in Air New Zealand.
Air New Zealand today begins one of the most crucial weeks in its history, with chief executive Gary Toomey warning it will be back to square one if the Government rejects greater investment by Singapore Airlines.
Air NZ submitted its formal proposal for relaxing limits on foreign ownership last Thursday, but expected the Government to take several weeks to decide.
Mr Toomey will meet Transport Secretary Alastair Bisley, and possibly Treasury Secretary Alan Bollard and Mark Prebble, head of the Prime Minister's Department, this today.
He also hopes to meet Transport Minister Mark Gosche and Tourism Minister Mark Burton later in the week, and he and acting chairman Jim Farmer have sought a meeting with Prime Minister Helen Clark.
But Mr Toomey said that meeting could be delayed as he understood the prime minister wanted Finance Minister Michael Cullen to be present. Dr Cullen is away for two weeks.
Ahead of these meetings, Mr Toomey is talking up the Singapore proposal, taking pains to point out that there was "no Plan B or Plan C".
Singapore Airlines has not specified the size of the stake it is seeking, saying only that it wants to increase it significantly. Air New Zealand says Singapore Airlines would help the cash-strapped airline.
Cullen said Singapore Airlines was "suitable" because it is cash-rich, but that the New Zealand government had to think of its strategic interests like tourism and promoting it's flagship carrier.
Air New Zealand owns the loss-making Ansett Australia airline and hopes a deal with Singapore Airlines would help fund fleet upgrade estimated at up to 5 billion New Zealand dollars ($2 billion).
Singapore Airlines all smiles
Singapore Airlines (SIA) officials were privately all smiles on hearing direct from Finance Minister Michael Cullen last week that the government would still find it "very, very difficult" to lift the 25 percent foreign airline investment cap on Air New Zealand.
Cabinet ministers next week will consider whether to approve Singapore Airlines (news/quote)' quest to buy a bigger stake in national carrier Air New Zealand, an official said Thursday.
Finance Minister Michael Cullen will take what his spokeswoman called a ``scoping paper'' to senior ministers, but no final decision on the deal is expected until late August.
The document ``outlines the problems, the issues and a narrowing down of the options'' available to the government over fresh investment in Air New Zealand, she said on customary condition of anonymity.
Singapore Airlines has said it wants to increase its 25 percent stake in Air New Zealand to 49 percent, a move that requires the government to lift a 35 percent maximum foreign ownership cap on Air New Zealand.
Singapore rules out govt role in Air NZ, Ansett fate