Air New Zealand Needs a Section 26 Notice

Friday 9 Aug 2002

Financial journalists should hound Finance Minister Michael Cullen for denying knowledge of attempts to sell control of Air New Zealand to Qantas, ACT Commerce Spokesman Stephen Franks said today.

"It insults us all for Michael Cullen to decline comment on the Qantas moves on the grounds that he has no formal proposal.

"The 80 percent owner of a major business should know - and should make sure - that the executives are not wasting their time on a proposal that should never fly. Lloyd Morrison usefully explained these realities on Linda Clarke's programme recently.

"It is clear to anyone with any commercial experience that a Qantas presence on the Air New Zealand board will nobble Air New Zealand. It doesn't matter how small their shareholding, or how contrived the assurances and conditions. In my long experience as a commercial lawyer, shareholders agreements were always suspect. They are hard to write and even harder to enforce and the Commerce Commission would be utterly naive to rely on one.

"Having Qantas on the Air New Zealand board will doom New Zealanders to propping up the share values of Qantas and Air New Zealand through monopoly profits for the foreseeable future. It will also ensure that Air New Zealand can never be the nucleus for a determined Star Alliance challenge to Qantas throughout Australasia.

"Community opposition will not go away because it is not based on primitive nationalism. People understand that the Government might want to be able to claim shrewd investment by showing a profit on their rescue funds. But any profit will simply be the price paid for selling future New Zealanders into airfare bondage.

"The New Zealand Government needs to curry favour with the Australian government even though it rewards their ruthless opportunism in persuading Cullen to sabotage the Singapore Airlines offer, and in abandoning the open skies agreement. Labour is trying to make up ground it lost for New Zealand by reneging on defence and immigration co-operation.

"Mr Cullen should have told Qantas two years ago - and repeated now - that the Commerce Commission will get a 'no way' Government instruction under section 26 of the Commerce Act. Simon Botherway from Brook Asset Management - one of NZ's highest profile fund managers, had it right weeks ago: `this is simply a poor deal from the New Zealand consumer's point of view... I can think of no other asset sale that would hand such unmitigated monopoly power to a foreign buyer'," Stephen Franks said.

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