Forum Archive Index - March 2000

["simon dallimore" <smndallimore@hotmail.com>]

It appears as if the more cautious investors decided to wait until the air 
clears over the Air NZ sale before making their move while speculators and 
short-term traders decided to bail out in a hurry today - which is why we 
have seen the price drop to $2.30.

I have seen this happen in the past couple of weeks and the price has 
quickly moved back to the $2.40 resistance level so those of you who are 
sitting on AIRVB shares, do not worry. A sale of a stake in AirNZ is 
inevitable and it is only a matter of when and to whom.

The heavy trading in Brierley shares which continued today from last week 
indicate that Singaporean interests are increasing their control of BRY 
which suggests that SIA are still very much the “favourite” in this race.  
Many aviation commentators and analysts also believe that the Qantas bid 
will not be successful because of regulatory monopoly constraints from both 
the Australian and NZ Commerce Commissions.

Attached below is an article from the Singapore Business Times which may be 
of interest to readers.

---------------------------------------------------------------
Talks with SIA spark suitors' pursuit of AirNZ
Even Qantas comes a-wooing but Brierley is in no hurry to sell its stake

[By Conrad Raj in Singapore and Surinder Singh in Sydney ]

THANKS to its talks with Singapore Airlines, Air New Zealand has now 
attracted a number of suitors, including Australia's Qantas Airways.

However, Air New Zealand's current controlling shareholder, Brierley 
Investments, is in no hurry now to sell as it wants to first close its 
purchase of domestic Australian carrier Ansett Airlines from News Ltd.

"The news of the discussions with SIA flushed out several buyers, including 
Qantas. But unfortunately the attempts of these various people to get hold 
of the 'B' shares (open to foreigners) has complicated regulatory approvals 
for the acquisition of Ansett," Brierley's CEO Gregg Terry told BT 
yesterday.

However, he declined to name the other suitors at this stage.

Air New Zealand, which already owns 50 per cent of Ansett, has decided to 
exercise its pre-emptive rights to buy the other half from Rupert Murdoch's 
News Ltd after the latter struck a deal with SIA to sell it for A$500 
million.

Then Brierley decided that it needed a strategic partner to take Air New 
Zealand forward and offered to sell the 16.7 per cent of the "B" shares that 
it owns in the Kiwi carrier to SIA.

Talks with Brierley stalled after SIA said any deal with Air New Zealand 
would be contingent on it getting an eventual 40 per cent stake in Air New 
Zealand.

The Singapore carrier, having been thwarted in its earlier attempt to 
penetrate the lucrative Australian domestic market through Ansett, decided 
to enter the market through a tie-up with Richard Branson's proposed 
Australian venture, Virgin Australia. SIA is in the process of completing 
its 49 per cent purchase of Mr Branson's flagship Virgin Atlantic for which 
it is paying £680 million (S$1.9 billion).

However, Brierley is not shutting its doors completely. Mr Terry explained: 
"So we have decided to simply focus on closing the Ansett (deal). After the 
end of April we will reconsider our strategy regarding Air New Zealand."

Meanwhile, Qantas chief executive James Strong told the Australian Stock 
Exchange in a statement yesterday that the company was interested in Air New 
Zealand as a partnership between them "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".

Dr Cheong Choong Kong, SIA's deputy chairman and chief executive officer, 
who was in Sydney yesterday to launch the airline's increase in its daily 
flights from Singapore to the Australian city from two to three, declined to 
comment on the Qantas statement.

"I am not going to talk about it. I know what you are going to ask," Dr 
Cheong said at a media briefing.

Analysts said Qantas' move was an attempt to block a heavyweight alliance 
between SIA and Air New Zealand which could erode its current dominance in 
the Australian domestic market.

Qantas spokesman Bernard Shirley yesterday told BT in Sydney that the 
airline was not prepared to make any statement at this time apart from what 
was in the statement to the ASX.

Any transaction between Qantas and Brierley will be subject to a 
satisfactory resolution of a significant number of issues. These would 
include the sale by Air NZ of Ansett, New Zealand and Australian government 
approvals, New Zealand and Australian competition authority approvals and 
support from the board and shareholders of Air NZ.

A Reuters report on the Qantas move quoted Merrill Lynch analyst Simon 
Gresham as saying that a Qantas connection would make AirNZ, which he valued 
at about NZ$3.50 apiece, more appealing. The B-class stock available to 
foreigners ended at NZ$2.39 yesterday.

The report also quoted Macquarie Equities analyst Ian Myles as saying: "This 
is a very interesting move by Qantas but I still believe that it's more 
likely that someone in the Star Alliance (like Singapore) will own AirNZ."

Morgan Stanley Dean Witter analyst Chin Lim said: "I think it will be very 
difficult for Qantas to get a position."

Besides the Air New Zealand "B" shares, Brierley also holds just over 30 per 
cent of the "A" shares which only New Zealanders can own.


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