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Qantas On The Warpath

Fri Jun 22, 2001 2:30 am

From this mornings (Fri) Melbourne Age:

Qantas seeks to lift foreign-owner cap

Friday 22 June 2001

Qantas will lobby the Federal Government to lift foreign ownership caps in the wake of the Singapore Airlines/Air New Zealand deal announced on Tuesday.

With the prospect of the Air New Zealand deal taking at least six months to conclude, the Australian airline is expected to attack the market by lining up Air NZ's wholly owned subsidiary, Ansett Australia, for a knockout blow with capacity increases and lower fares while setting up a low-cost international airline.

Qantas chief executive Geoff Dixon is already applying pressure on the Australian and New Zealand Governments to review the status of Ansett's ownership in light of the prospect of Singapore Airlines increasing its stake in Air NZ from 24.9 to 49 per cent.

"It would be unprecedented for the Singapore Government to control its own airline, Singapore Airlines, as well as Air New Zealand, Ansett Australia, and Ansett International," Mr Dixon said.

"This would not happen in any other part of the world," he claimed.

Mr Dixon and chairman Margaret Jackson met Transport Minister John Anderson on Wednesday night and they will meet Prime Minister John Howard again next week.

Air NZ/Ansett chief executive Gary Toomey conceded yesterday that the deal could attract the attention of Australia's Foreign Review Board and the Australian Competition and Consumer Commission. But he insisted that control by Singapore Airlines was not an option.

Analysts suggest the most likely outcome is that the NZ Government will approve the deal and lift ownership caps, now at 25 per cent, and the Australian Government will follow suit, allowing British Airways to increase its 25 per cent stake in Qantas to 49 per cent.

New Zealand Finance Minister Michael Cullen has already sought advice from an investment bank on changing the foreign-ownership regulations, while the opposition National Party has stated it would support the relaxing of the limits.

Greater access to foreign equity markets is the key to both Qantas and Air NZ being able to raise funds for aircraft purchases. Qantas has $8.4 billion in aircraft on order, while Air NZ needs to spend $5 billion.

Qantas' pitch is that it needs British Airways help to balance the Singapore Airlines-led resurgence of Ansett and Air NZ.

Before that happens, Qantas wants to deliver some more blows to Ansett, which is still struggling to recover from the groundings of its 767s at Easter.

According to analysts, Qantas will also move to set up a lower-cost international airline to better compete with Singapore Airlines and Malaysia Airlines, which have lower staff costs.

Late last year, Mr Dixon briefed analysts in London and made it clear that Ansett was the target of a big push to further increase its dominant market share of 56 per cent. In another briefing, this time to executives, he warned that the airline needed to make significant inroads into Ansett's remaining corporate clients before Singapore Airlines was able to pour critically needed cash into Ansett.

High fuel prices, the weak Australian dollar and poor staff morale after years of ownership instability have ravaged Ansett, leading to a $119 million loss for the six months to December. That loss is known to have blown out considerably.


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RE: Qantas On The Warpath

Fri Jun 22, 2001 2:47 am

Can't QF cope with the AN competition or something???

And what difference can BA make?!
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RE: Qantas On The Warpath

Fri Jun 22, 2001 10:59 am

"Can't QF cope with the AN competition or something??? '
That's a silly question, of course they can. They probably cant compete with SQ/AN/ANZ/DJ/VS(?). Your second Question is answered above "Greater access to foreign equity markets is the key to both Qantas and Air NZ being able to raise funds for aircraft purchases"

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RE: Qantas On The Warpath

Fri Jun 22, 2001 11:12 am

Ive said it before, and ill say it again!! SORE LOSERS!!!!!
SQ is much better for NZ than QF!
v jet
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RE: Qantas On The Warpath

Fri Jun 22, 2001 11:32 am

Jet Guy , Thanks for that well thought out rather moronic response. Why respond if you dont have anything to contribute. It is not a case of SQ being better than NZ or QF or MH or TG or UA or BA or AZ or LH etc etc, nor is it about being sore losers.
It is about a foreign airline/Govt gaining control of the majority of the ANZAC aviation market. It may come as a surprise to you but that will bother a lot of people on both sides of the Tasman. I've said it before. I dont believe it is over by a long way yet.
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RE: Qantas On The Warpath

Fri Jun 22, 2001 11:36 am

Jeez v-jet calm down, cant I state my OWN PERSONAL view without some one jumping down my neck!!!!!
I have read all that has come out about the whole NZ/AN/QF/SQ deal, and thats what I think, sorry if listening to other peoples OWN PERSONAL opinions is such a burden to you!!!!!!!!!!!
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RE: Qantas On The Warpath

Fri Jun 22, 2001 11:45 am

VJet, you are right, it is about control, but regardless of what happens one airline grouping will end up larger than the other and there is nothing in Qantas' behaviour that suggests it would be anymore responsible or competitive than SQ if it were granted (or allowed to continue in) a dominant position. Both are businesses and both companies seek profit and both companies seek control. Words by SQ or QF that they only seek partnership and co-operation are to be taken for little value. Both companies like to be able to direct where their investments are spent.

It is the governments of both Australia and NZ's duty to ensure consumers are not affected unduly by these transactions. Either option has possible deleterious effects on competition but there is no doubt that the NZ government at least would probably prefer the SQ option as it preserves trans-Tasman competition, trans-Pacific competition (QF already has full rights out off AKL) and domestic competition in NZ.

The QF option is much more risky in this regard as a monopolistic situation is created across the Tasman and SQ has never said that if it were to acquire AN that it would have any interest in establishing a domestic operation in NZ and to do so would be amazing frankly given the experience of Ansett NZ.
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RE: Qantas On The Warpath

Fri Jun 22, 2001 12:40 pm

I've been trying to bite my lip and not say anything, but I have to. Most people would probably not have a problem with SQ taking control of NZ if SQ was a private company but it is not. Would the Singapore government allow an airline under the control of a foreign government to take control of their national airline ??? I think not.
Anyway whats wrong with QF having a whinge or trying to set up a low cost airline, one sounds like a natural reaction and the other sounds like a reasonable idea to me, the problem will be Australian unions, but if QF can guarantee few or no job losses at the main carrier then they would probably support it, as lets face it there will be more jobs, some in Australia and some overseas.
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