SYDNEY - Singapore
Airlines announced on Tuesday the sale of its "non-core"
6.3% stake in Air New Zealand, ending a four-year
strategic investment in the now government-owned
carrier.
The decision comes just two weeks after
the New Zealand High Court rejected a planned alliance
between the Kiwi flagship and Qantas Airways Ltd.
Analysts said the timing of the sale recognized
that the court's decision to deny an Air NZ/Qantas
alliance had reduced the prospect of increased
competition that Singapore Airlines would have faced
from such a partnership on the trans-Tasman route.
It also signaled an end to Singapore Airlines'
long-held ambitions for a major stake in Air New Zealand
(NZ), after its earlier 25% interest was slashed back to
6.3% following an Air NZ government bailout in 2001.
"The timing is a bit of a coincidence, but at
the same time you also have to take it at face value
that there's no strategic value there any more for
Singapore Airlines and they are liquidating because it
is not central to their needs," said Peter Harbison,
managing director of the Center for Asia Pacific
Aviation.
Singapore Airlines is selling
37,833,309 shares through an accelerated book build via
UBS New Zealand. The shares are expected to be sold at
between S$1.84 and S$1.87.
Air New Zealand,
which called for a trading halt on its shares in New
Zealand and Australia on Tuesday, closed Monday at
S$1.89.
Based on Monday's closing price,
Singapore Airline's stake is currently valued at S$72.3
million (US$43 million) against Air NZ's total market
value of around S$1.14 billion.
The New Zealand
High Court on September 20 upheld an earlier New Zealand
competition watchdog ruling that the alliance plan was
anti-competitive.
The Australian Competition
Tribunal is yet to announce its decision on an appeal by
both airlines against an Australian Competition and
Consumer Commission ruling that the alliance was
anti-competitive
However, Qantas has already
said it was moving on from the plan and would look for
other ways to cooperate with Air NZ that would not
create competition concerns.
Singapore Airlines
said today that despite the sale of the stake it would
continue to cooperate with Air NZ in mutually beneficial
areas.
"The decision by SIA [Singapore Airlines]
to sell its Air NZ shares is consistent with its
strategy to monetize non-core holdings and will not
impact on various areas of cooperation between the two
airlines, which will continue into the future," it said.
Air NZ said the sale was not a critical issue
for the airline and that its relationship with Singapore
Airlines would be maintained.
"There is no
necessary link between equity and strategic
cooperation," the Center for Asia Pacific Aviation's
Harbison said. "Qantas and British Airways have one of
the most close cooperation arrangements but there's no
equity involved."
Last month, British Airways
sold its 18.25% stake in Qantas Airways Ltd for a total
US$790 million.
Singapore Airlines is not
expected to be so lucky. Its earlier investment of 25%
in Air NZ, made in November 2000, was worth US$594
million.
Analysts say Singapore Airlines, like
Qantas, will now look for other potential equity or
alliance opportunities in the expanding aviation markets
of India and China.
India has tight foreign
ownership rules on its local airlines, but these are
expected to be relaxed in 2005.
China,
meanwhile, is being viewed as a potential pot of gold by
regional airlines, given the country's population and
growing mobility.
(Asia Pulse)
Oct 6, 2004
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