National calls on govt to "come clean" on Qantas deal

By NZPA

Thursday 18th July 2002

National Party leader Bill English today called on the Government to "come clean" on its plans for Air New Zealand.

Speculation is mounting that Qantas has already done a deal with Air NZ to buy a 25 percent stake off the Government, subject to next week's election result.

"Last week a team of senior Qantas executives, headed by general manager of airline strategy and network Paul Edwards, spent time in the offices of Bell Gully. If they were not doing due diligence, what were they doing?" Mr English said at the launch of National's transport policy in Auckland this morning.

Mr English said the Government owed New Zealand taxpayers an explanation as to what was going on.

"Selling Air NZ to Qantas would marginalise Air NZ to become a regional airline, a minor player in the trans-Tasman and international markets. It will mean higher prices and less services as we lose competition."

A spokesperson for Finance Minister Michael Cullen today dismissed Mr English's calls, saying the Government was not party to any talks between Air NZ and Qantas.

"The Government has made it very clear that it intends to maintain majority ownership of Air NZ for the foreseeable future," the spokesperson told NZPA.

The Government would consider selling a cornerstone minority shareholding to another airline, including Qantas, if Air NZ recommended it, but the deal would need to be approved by Air NZ's board first.

"The procedure has to be that anyone wanting to buy a stake would go to the Air NZ board and negotiate with them. When those negotiations reach finality, the Air NZ board would come to the Government with a formal recommendation. That hasn't happened yet," the spokesperson said.

Air NZ chief executive Ralph Norris last weekend added fuel to speculation that a deal was imminent, saying there were "obvious benefits that may accrue from a well thought out arrangement between the two airlines".

One analyst spoken to by the Dominion Post said Dr Cullen was a keen supporter of the Qantas proposal.

Investment banker Lloyd Morrison, in an e-mail to about 300 sharebrokers this week, said his inquiries indicated that Dr Cullen and Air NZ chairman John Palmer were the driving force behind a Qantas deal.

Mr Morrison's company, Morrison and Co, manages utilities investor Infratil, which owns 66 percent of Wellington International Airport and would stand to lose money if Air NZ and Qantas worked together.

Any deal would have to be approved by competition regulators on both sides of the Tasman -- a process that could take months.

In the meantime, Qantas has applied for a New Zealand air operating certificate and is recruiting seven senior managers for its New Zealand subsidiary Jetconnect.

Qantas spokesperson Michael Sharp said yesterday the Australian carrier remained committed to New Zealand.

Talks between the two carriers were continuing.

"We are in discussions and there is nothing to add at this stage."

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