Merger ‘must bring joint gain’

Press, 12 April 1988, Page 8

Merger ‘must bring joint gain’

By

BRENDON BURNS,

! political reporter

Any merger between Air New Zealand and Qantas. should only proceed if there were clear advantages to both airlines, said the Minister for State-Owned Enterprises, Mr Prebble, yesterday. [His comments, issued in a statement after he had briefed the Cabinet on the merger proposal, were cool in enthusiasm compared with those of his Australian counterpart. I Senator Gareth Evans, the Australian Minister for Transport and Communications, said yesterday that a merger made "an awful lot! of sense.” Mr Prebble’s statement noted the advantages to Australia of some form of business alliance between Qantas and Air New-Zea-land. i . I ,

“From the Australian point of view, a business merger has a lot of attractions,” he said.

Qantas required extra capital and a merged airline would provide a platform for what could be a very attractive public share float, said Mr Prebble. He did not spell out any specific benefits that New Zealand would gain, merely noting that the Government was already committed to selling 25 per cent of Air New Zealand.

Underlining the apparent difference in enthusiasm, Mr Prebble said, “Clearly a merger of our two airlines should' only proceed if it brings clear and demonstrable advantages to both countries.” He said the Cabinet had agreed to a [further examination of the com-

plex legal, financial and international treaty issues raised by any form of business alliance between the airlines.

Senator Evans said yesterday that it might be possible “within a week or so” to know if the merger could proceed.

However, Mr Prebble’s view was that it was not possible to say how soon both Governments would have enough information to determine what option brings [the most advantages. 1

New Zealand had long held the view that it was to its own advantage and Australia’s that the two national airlines co-oper-ate, he said.

Qantas and Air New Zealand had different basic route structures and in mest parts of the world wer^p,complimentary, not

competitive. Yesterday, Senator Evans spelt out in a radio interview why the original proposal j for a QantasAustralian Airlines-Air New Zealand merger had been abandoned. This had been rejected after [a visit to Canberra last i Friday by Mr Prebble.!

Senator Evans said the presence of Australian Airlines,! — the Govem-ment-owned domestic carrier !;— had made the original proposal too hard to bring j together. The balance of two airlines against Air New Zealand was weighted too heavily in Australia’s favour. I ‘ 'I ■

“That was just a bit difficult! for the New Zealanders [ to accommodate given their poetical sensitivities on thisAkind

of issue.” Greater industrial relations problems were expected from the involvement of a domestic airline.

A three-way J merger created complex implications for other aviation interests, said Senator Evans.

But the Qantas-Air New Zealand merger was “still very much on the table,” as were lesser options for more co-operation.

“I think both countries acknowledge — certainly Richard Prebble and I are in complete agreement — that if we could bring it off it makes an awful lot of sense in terms of our role in the region."

Senator Evans, said a merger would also help both countries cope with the emerging realities of international aviation.