Foreign offers for Air N.Z. ‘should be considered’

Press, 9 March 1988, Page 2

Foreign offers for Air N.Z. ‘should be considered’

BRENDON BURNS,

political reporter

Foreign offers [ for the shareholding in Air

New Zealand should) be considered, the Treasury has advised the Government.

It also recommends that no limit be [imposed on the amount of shareholding that buyers are allowed to tencier for, although the announced intention is to bell only 25 per cent. ) Documents I containing information for prospective buyers are being completed under the watch of thei Treasury’s director of relations, Mr Richard Shallcrass. | ) The Treasury's advice to the Government was not to impose any preconditions on I the size of the shareholding, or to limit offers to New Zealand buyers, he said yes-, terday. ' j This was in line with the Government’s policy of getting maximum return on its assets.| When this led to the announcement that Petrocorp was to. be sold to The foreign buyer, British Gas, the Government faced a backlash from its| own backbench as well: as the public. The Treasury’s advice . to the Government follows up that more shares may be sold than originally announced. The Minister for State-Owned Enterprises, Nfr Prebble, said last week that there could be a slight increase in the 25 per cent shareholding which the (last Budget. said would ; be sold. Air New Zealand has

itself i supported selling a larger . shareholding, but has made clear it wants the buyer to be local. Mr; Shallcrass said the Treasury advice [ to ' the Government was| that it would . be unwise, not to consider any offer, including those from foreigners. Qantas and British Airways} are believed to be interested in the| sale of Air fJew Zealand’s shareholding. “Wiel don't think) there is a need to take a''position for or against because it is . foreign,” he said. Putting' limits . on tenders might not provide a true indication |ojf what the shareholding was worth. But | he believed overseas buyers would be discodraged from) bidding for as I big a share of Air New I Zealand as j a New Zealand company. International air agreements [are negotiated on a country-to-country basis. A major interest in Air New [Zealand, particularly by a [foreign airline, could allow ' another country's Government to use this as a bargaining point. International air agreements involving Air New Zealand [ could be | jeopardised}. ) But a New company would not face such | dangers'. Brierley’s has expressed an interest. Mr[ Shallcrass said the advice to the Government was to give priority to consider a sale to a corpo-

rate buyer. ; Overseas practice was to make about 4 per cent to 10 per cent available to staff when selling airline shares. The Minister of Finance, Mr Douglas, is the shareholding Minister in Air New Zealand. He told “The Press” that he accepted that the price paid for Air New Zealand would not be as high as it would have been before the Government allowed Ansett to compete internally.

“The fact that we took this step would probably mean the airline is not worth as much as if it were a monopoly,” he said.

But Mr Douglas said his aim was to improve the over-all economy. Allowing Ansett to compete had lowered fares, enhanced air services and provided ' more freight capacity and jobs. Mr Douglas said it was not his primary role to get a maximum return from Air New Zealand for the taxpayer. "I have a higher role and that is the efficient working of the New Zealand economy.” Mr Douglas rejected the suggestion that the Government had been forced to allow Ansett Australia to bail out the New Zealand company because it was losing money. “No, I don’t think that was the point,” he said.