Forum Archive Index - March 2000

[frank fernandez <frank.fernandez@xtra.co.nz>]

Keith,
Re the collapsed BRY/Air NZ deal with Singapore Airlines, these are the
issues, latest information and my analysis.

1. Singapore Airlines (SIA) wants to pay $2.75- $2.80 for AIRVB shares,
and BRY's Sir Selwyn Cushing wants $3.00 per share. I can't see SIA
giving way on this score as AIRVB shares are currently only worth $2.46
and falling.

2. SIA wants to take up to 40 per cent and board control of Air NZ.
Prime Minister Helen Clark is against this, and I don't believe Sir
Selwyn and Jim McCrea (Air NZ CEO) are likely to step aside in a hurry.
                  
3.There has always been friction and tension between Sir Selwyn and
SIA's CEO, Dr Cheong Choong Kong (inflamed last year when Air NZ checked
a bid by SIA to acquire News Corp's half share in Ansett). Dr Cheong
only a special trip to New Zealand last week after BRY CEO Greg Terry
brokered an understanding with Dr Cheong in Singapore. The intervention
of Sir Selwyn and response of PM Helen Clark has forced the SIA chief to
return to Singapore without a deal and "fuming" (as reported by the
Singapore media).

4. SIA craves a high degree of control in its investments and unless BRY
and the NZ government change its minds, this is not likely to happen.
Aviation analysts (commenting in Singapore's Strait Times over the
weekend) have said that "it should be either 40 per cent or nothing for
SIA. If SIA's stake goes below 40 per cent, then SIA don't have a say
and will not be able to use this stake to round up their route
networks." 

5. SIA is one of the world's biggest and most profitable airlines. It
does not have to go with BRY and Air NZ, and has a fall-back option in
its proposed deal to buy into Virgin Australia before the end of this
month. 

The above are the facts at this point in time. I would not like to
advise you as to the right course of action to take where your shares
are concerned as that is a decision only you can make.  However,
needless to say, if an SIA deal is not struck with BRY, it is extremely
likely that both BRY and the Air NZ share prices will flounder.

Cheers,

Frank Fernandez

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