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Qantas To Buy Air Nz?!

Mon Mar 27, 2000 11:26 am



By Reuters

SYDNEY (Reuters) - Australia's Qantas Airways Ltd (QAN.AX) said
on Monday it had held talks with New Zealand investor Brierley
Investments Ltd (BRY.NZ) aimed at buying its stake in Air New Zealand
to create a major regional airline.

``Qantas is interested in acquiring the shareholding as it believes a
partnership between Air New Zealand and Qantas would create a major
airline group in this region of the world with the size and capital base to
compete aggressively in a rapidly changing international market,'' Qantas
said in a statement.

The Qantas move to buy the trans-Tasman rival Air New Zealand is seen
by analysts as an attempt to block a heavyweight alliance between
Singapore Airlines (SIAL.SI) and Air New Zealand
(AIRVB.NZ)(AIRVA.NZ), owner of Qantas' major competitor Ansett
Airlines.

Singapore Airlines is also trying to negotiate a stake in Air New Zealand
from Brierley, the major shareholder with a 17 percent holding, but talks
have said to have stalled over the size of any such stake. Singapore is
believed to want 25 percent.

Qantas said any buy-out would be subject to the resolution of significant
issues, such as the sale by Air New Zealand of Ansett and government
and regulatory approval in Australia and New Zealand. Any Qantas/Air
New Zealand partnership would likely have to divest the Ansett business
to satisfy regulators.
 
tullamarine
Posts: 1614
Joined: Thu Aug 05, 1999 1:14 pm

RE: Qantas To Buy Air Nz?!

Mon Mar 27, 2000 12:22 pm

This is so bizarre, it could be true.

QF owned 19.9% of NZ until NZ bought 50% of AN. SQ wanted to buy into AN but NZ exercised its right of first refusal and ended up buying 100% of AN. SQ are negotiating to buy part of NZ but is not really interested in NZ but sees it as the only way to get access to AN. This latest episode throws all the balls in the air again and given the regulatory approvals required will take months to sort out. The possible conclusions could be

Status quo

Status quo with SQ buying into NZ. Looked very likely last week but SQ are getting impatient with NZ's management and the NZ government.

QF buying into NZ. This is out of left field but would result in

- NZ leaving Star and joining Oneworld
- NZ selling AN to SQ. SQ would then probably pour heaps of money into AN for fleet renewal and force Virgin to use its operations as AN's discount operation.
- NZ and QF forced to give up a huge number of trans Tasman slots to AN to preserve competition on this route. Without this regulatory approval of QF's takeover is highly unlikely.
- AN or SQ would probably resume management control of Ansett NZ which News sold last week.

717,721/2,732/3/4/5/7/8/9,742/3/4,752/3,762/3,772/E/W,300,310,319,320/1,332/3,388,DC9,DC10,F28,F100,142,143,E90,CR2,D82/3/4,SF3,ATR
 
B727-200
Posts: 1008
Joined: Fri Nov 05, 1999 11:28 am

RE: Qantas To Buy Air Nz?!

Mon Mar 27, 2000 1:03 pm


Why would you want to work for any other industry?? Only the airline industry could get away with these multi-national "incestuous" activities.

One question, if Virgin become AN's "discount operation" then what will happen to Kendell?

SQ must be like a kid in a lolly shop right now. It is no secret that SQ want a piece of the SYD-LAX pie, and thus a piece of AN as their provider of this. One would think SQ are hoping QF make the deal and AN goes up for sale again.

Also, I hear the AN desire to fly SYD-LAX has been somewhat retarded by the NZ board, because lets face it, it must be the only route that brings any decent revenue in for them. An Ansett introduction on this market would see massive amounts of patronage move from NZ to AN, basically cutting the main artery of the NZ company.

And what happens to Ansett NZ? QF have been very interested in buying out this operation for some time.

I might stick around in the Aussie Airline Industry for just a little bit longer so I don't miss the fun!!

B727-200.
 
Guest

RE: Qantas To Buy Air Nz?!

Mon Mar 27, 2000 1:12 pm

B727-200: Kendell Airlines would be left unaffected as it is only a regional carrier, which does not operate on trunk routes. The same would go for Skywest Airlines.

The main obstacle to any QF-NZ tie-up is the trans-Tasman routes. I doubt QF wants AN operating on these routes at all. The whole point of QF buying NZ is to stifle SQ's entry in the Aussie domestic scene. It has been quoted by SQ that they are not at all interested in NZ. Their gold prize is AN. So let's hope that QF go ahead with this stupid deal, then SQ can get what it wanted all along, AN. It would seem also, that if QF does go ahead, that ZQ would once again become aligned with their namesake in Australia. There had been some talk of QF buying ZQ, but the latest I heard was that a group of Kiwi businessmen were putting together a plan to buy ZQ from News Corp.

This is going to be a very interesting couple of months ahead.

Has anyone heard anything further on Spirit Airlines?
 
Guest

RE: Qantas To Buy Air Nz?!

Mon Mar 27, 2000 7:24 pm

If Qantas does get a stake in AirNZ and thus into AB as well, all the Aussie especially those from Perth should cry for it. Why? bcos they will ended up in expensive airfares (to East Cost) forever, unless those new non-frills company could growth stronger and bigger and compete with QF and An. For me, the current duopoly business practice is very unethical already, can't imagine what's going to happen if its become monopoly.
 
Guest

RE: Qantas To Buy Air Nz?!

Mon Mar 27, 2000 7:25 pm

If Qantas does get a stake in AirNZ and thus into AN as well, all the Aussie especially those from Perth should cry for it. Why? bcos they will ended up in expensive airfares (to East Cost) forever, unless those new non-frills company could growth stronger and bigger and compete with QF and An. For me, the current duopoly business practice is very unethical already, can't imagine what's going to happen if its become monopoly.
 
tullamarine
Posts: 1614
Joined: Thu Aug 05, 1999 1:14 pm

RE: Qantas To Buy Air Nz?!

Mon Mar 27, 2000 8:14 pm

Phileo

There will be no monopoly. There is no way the Australian Competition Commission and the government would approve the deal unless NZ immediately sold off AN.
717,721/2,732/3/4/5/7/8/9,742/3/4,752/3,762/3,772/E/W,300,310,319,320/1,332/3,388,DC9,DC10,F28,F100,142,143,E90,CR2,D82/3/4,SF3,ATR
 
Guest

Qantas Not Getting NZ After All

Mon Mar 27, 2000 8:24 pm

Well QF, back to business. SQ have finally gotten a 25% stake in NZ. Refer to new thread
 
Guest

Wait A Minute..deal Back On..maybe!

Tue Mar 28, 2000 3:16 pm

What I find really hard to understand from the report below, is how Canberra will allow NZ to own 100% of AN, yet, Wellington will not allow any airline to own more than 25% of NZ, with foreign owners not allowed more than 49%. Don't the Kiwis and us Aussies have open business links these day, without these bullshit limits placed on ownership?

Anyway, here is the report from www.nzherald.co.nz

Brierley halts talks on sale of Air NZ

28.03.2000 - By GEOFF SENESCALL
Brierley Investments suspended sale talks of its Air New Zealand shareholding yesterday amidst news that Qantas Airways was also an interested buyer.

After failing to reach an agreement with Singapore Airlines earlier this month, Brierley has put any further discussions on hold until Air New Zealand completes its purchase of Ansett Australia.

Air New Zealand is scheduled to conclude its $A680 million purchase of the remaining 50 per cent shareholding in Ansett from Rupert Murdoch's News Corp by the end of April.

This decision to put talks on hold was made at a Brierley board meeting in Singapore.

But in the latest twist, Qantas chief executive James Strong has issued a statement confirming reports of its interest in Air New Zealand.

Qantas, Australia's largest airline, said it had had discussions with Brierley over its 47 per cent stake.

A partnership with Air New Zealand would establish a major regional airline with the "size and capital base to compete aggressively in a rapidly changing international market."

However, any purchase would be dependent on the sale by Air New Zealand of Ansett.

Singapore Airlines chief executive Dr Cheong Choong Kong - who was in Sydney to announce its expansion of services there - declined to comment on the Qantas move.

However, analysts suggested that Singapore might not be upset by the development, given its preferred option had always been to buy into Ansett directly. Air New Zealand, however, declined to waive its pre-emptive rights over the News stake in June last year. This forced Singapore to start negotiating with Brierley over its holding in Air New Zealand.

Peter Harbison, the managing director at the Centre for Asia Pacific Aviation, said: "It's quite a good tactical move by Qantas to become involved and try to perhaps divert the course of things."

But he added both regulatory and the commercial difficulties were so hard to overcome that it would have to be an "outside prospect if they succeed."

A Qantas and Air New Zealand alliance, even without Ansett, is unlikely to get Government regulatory approval, because of the two carriers' dominance on various routes in the region particularly the Australian-New Zealand path, Mr Harbison said.

The Australian antitrust authorities are already signalling a keen interest in any proposal by Qantas to buy Ansett because combined they will control 100 per cent of Australia's $A7 billion aviation market.

The timing of Qantas' signal of interest comes as Singapore must decide whether it will join Sir Richard Branson's Virgin airline operation in Australia.

Qantas' share price has been hit hard since Sir Richard announced he was planning to start a low-fare service by September.

Unless there has been further slippage in the timetable, Singapore has until the end of this month to make up its mind on joining Virgin's Australian operation. Singapore recently purchased 49 per cent of Sir Richard's Virgin Atlantic Airways.

Qantas' decision to revisit Air New Zealand comes several years after it sold a 19.9 per cent stake.

Because the airlines were fierce competitors, the relationship was always tetchy.

But this time around it appears that Qantas is interested in owning a larger stake in Air New Zealand. Under existing regulations, a foreign airline cannot own more than 25 per cent and foreign holders no more than 49 per cent. Singapore-based Brierley is able to own the restricted class Air New Zealand shares through an entity called BIL NZ Assets. Whether this could be replicated is likely to be tested.


 
Guest

RE: Qantas To Buy Air Nz?!

Tue Mar 28, 2000 3:30 pm

I am having a hard time following this.

Here's what I make of it: Either way the Singapore poofters and Sir Richard Bastard will fark up the Australian aviation scene in grandiose style.

Is that too far off the mark?
 
Guest

Barnaby

Tue Mar 28, 2000 3:47 pm

Barnaby my boy, you are so very far off the mark it isn't funny!

The best thing that could happen to the Australian airline industry (in my eyes), is:

*QF buys 25% of NZ
*NZ has to sell 100% of AN (SQ will get this of course)
*VS Aussie takes off (of course with backing from SQ) and becomes aligned with AN as their low cost arm.
*AN will get a shitload of trans-Tasman routes (because QF and NZ will have to give up a lot)
*AN with the massive capital base of SQ at its disposal will get a brand new fleet with more 747-400s, allowing the launch flights to the US, and maybe Europe, in the process becoming a truly global airline.
*QF left out in the cold without a low cost arm, because all of this time they have been too worried about SQ gaining entry into Australia (which they will do either way), ties up with Impulse Airlines or Spirit Airlines
*The best thing is, fares on Aussie domestic routes will fall, leaving us travellers all happy campers.

Sidepoint: As a QF shareholder, I am hoping that they do not go ahead with the NZ deal. The share price has been falling continually since VS announced last year they would start domestic service. The last thing QF shares need at the moment is an announcement that AN will be sold to SQ because of a stupid move on NZ that they made. Although, I do have to say, that having SQ in the local scene, will only be good for the travelling public.

So, Barnaby is anyone screws anything up here, it is not SQ or VS, but QF, and QF alone.
 
Guest

RE: Qantas To Buy Air Nz?!

Tue Mar 28, 2000 4:12 pm

Are trans-Tasman routes really all that profitable? If not, don't the benefits of the deal outweigh the setback of QF/NZ having to give them up?

I was under the impression that Air NZ was a barely profitable outfit as it stands now. But better for QF to deal with 1 mega-competitior (SQ/AN) than with one mega-competitor (SQ/AN) and one smaller rival (Air NZ)...that much I understand.

Will QF will now put the ax on NZ's SYD-LAX service?

Nice screw job these guys pulled on QF I must say.
 
B727-200
Posts: 1008
Joined: Fri Nov 05, 1999 11:28 am

Latest News @16:00 Aus EST 28 Mar.

Tue Mar 28, 2000 4:19 pm


I have just heard officially that BIL has withdrawn from the NZ Stock Exchange, its intentions to sell its share in Air New Zealand. Instead, they will be committing itself to the ANZ's cause to acquire 100% of Ansett Holdings LTD.

BIL have confirmed, however, that they have spoken to and received expressions of interest from both SQ and QF.

Will keep my ear to the ground.

B727-200.