Asia Times: News Corp. grounds Singapore Airlines' Ansett deal



	June 12, 1999	atimes.com

Oceania

News Corp. grounds Singapore Airlines' Ansett deal

SYDNEY - Media and entertainment giantNews Corp. Ltd. has called off the sale of its 50 percent stakein Ansett Airlines amid squabbling between prospective buyerSingapore Airlines and co-owner Air New Zealand Ltd.

News Ltd., the Australian arm of global media group News Corp., expressed disappointment the two airlines had ''not yetresolved issues between them'' over News Ltd's plans to offloadits stake, but said discussions would resume if an agreementwas reached.

''We have faith that Singapore Airlines and Air New Zealandwill be able to reach agreement on how they wish to proceed,''News Ltd. chairman and chief executive officer Lachlan Murdochsaid. ''Once this occurs, News is prepared to renew discussionswith them."

Details on what kind of agreement News Ltd. would expectbefore reopening talks were not forthcoming. Singapore Airlines executives were meeting to discuss the issue while Air New Zealand could not be contacted.

News Ltd. has made no secret that it wants out of theairline because it does not form part of its corebusiness. In March, News announced plans to sell the stake toSingapore Airlines for A$500 million (U.S.$328.40 million), expecting to complete the sale around August.

Trouble with what had seemed like a fairly straightforwarddeal emerged earlier this week with reports that 50 percentstakeholder Air New Zealand was unhappy investors werediscounting its pre-emptive right to pick up the shares itself.

Conversely, moves by major Air New Zealand shareholderBrierley Investments to increase its holding in Air NewZealand were believed to have angered Singapore Airlines.

A suggestion that the Australian government would opposeAir New Zealand taking full control of Ansett, preferringSingapore Airlines to pick up the stake, has not been confirmed.

Murdoch said Thursday that News Ltd. was particularly pleased withthe improvement in the Ansett businesses and the companyremained committed to the management, staff and customers ofthe airline. ''Ansett's Business Recovery Program continues to addshareholder value and the outlook for the financial year 2000is very encouraging,'' he said.

Ansett booked a sharp 48 percent rise in 1998/99 interimnet profit to A$61.6 million. Earlier this year executivechairman Rod Eddington said the airline expected to achieve a10 percent increase in revenue as a result of joining the StarAlliance network.

To get the sale back on the drawing board, Air New Zealandmay have to pacify Singapore Airlines on the Brierley issue.Analysts said an agreement was reached between Air NewZealand and Brierley chairman Sir Selwyn Cushing, andSingapore Airlines' deputy chairman Cheong Choong Kong, thatwould allow the Singapore carrier to buy into Ansett and latertake an equity position in Air New Zealand.

However, Brierley continued to increase its stake in AirNew Zealand, pushing up its share price in the process,without also advising Singapore Airlines, the analysts said.

It remains unclear what Brierley's motives were. However,some analysts believe Brierley was acting on what it saw as atrading opportunity to gain from a rise in the Air New Zealandshares once a sale was confirmed.

(Asia Pulse)