From this mornings (Fri) Melbourne Age:
Qantas seeks to lift foreign-owner cap
By GEOFFREY THOMAS
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.