Singapore Airlines is finally out of Air New Zealand, but is it all about further close relations with Qantas? Pemberton Strong explains.
Singapore Airlines has finally ended its great Kiwi Adventure, at a loss of more than $500 million, but probably a lot more if you take into account opportunity cost, holding costs and the cost of executive time.
Air New Zealand shares were suspended while Singapore sold its 6.3% stake (see news story here) but they were relisted after the sale went through on Wednesday.
It was carried out in a similar way to the bookbuild type of arrangement that British Airways used sell its 18.25% of Qantas recently. The Air New Zealand stake was sold at a 3% discount to the previous price of $1.68, so it’s a sign that Air New Zealand is attractive to foreign
investors, especially with the New Zealand Government still a major shareholder.
Still, its a better sign for the airline and travellers across the Tasman than the rejected alliance with Qantas. The sale almost certainly came as a result of that rejection, Qantas would have snaffled the Singapore stake in Air New Zealand if it had won approval to build up a 20% plus stake in the Kiwi carrier. Qantas already has options to move to a 4.9% stake in Air New Zealand, but these are yet to be exercised.
Singapore was dudded on its Air New Zealand ambitions by the Brierley Investments mob, another company in the orbit of Singapore Inc’s investment arm , Temasek Holdings.
Back in the mid-1990s, Singapore had wanted to buy a stake in Qantas but the then Federal Labor Government and Qantas management didn’t want that and went with British Airways as the cornerstone investor in the float.
Singapore then started cuddling up to Air New Zealand, while keeping an eye on Ansett, in which Air New Zealand was building an interest. First TNT quit and then News Corp. Air New Zealand ended up in control of Ansett and Singapore appeared as a 25% shareholder, with Brierley owning 30% of the Kiwi airline.
But for Air New Zealand that was a false dawn. No new capital was injected, and effectively two arms of Temasek, the financially weak Brierley and the stronger Singapore Airlines all but controlled Air New Zealand. Then when Ansett collapsed in September 2001, Air New Zealand was crippled.
Singapore would not throw any more good money after bad and the New Zealand Government stepped in to bail out the Kiwi airline, diluting Singapore’s stake massively, from 25% to an effective 6.3% after the shares were consolidated last year. Brierley sold earlier this year as you can see from this story in The Age.
Now Singapore has followed Brierley out of the Air New Zealand register, much wiser for the experience, and it and its masters at Temasek will start snuggling up to the Mangy Roo.
In fact those suggestions have already started with the news last week that Temasek Holdings, the Singapore Government investment arm purchased some of the BA stake in Qantas. (The stake was put at 3% according to stories from Qantas about the Jetstar Asia launch in Singapore.)
Temasek is also a shareholder in Jetstar Asia, the new low cost carrier Qantas will start running out of Singapore in the next few months.
A lot of tosh has been written about the ambitions of this carrier and what it means for Qantas. First it has to operate efficiently and within cost parameters. It will not be able to fly into Australia without handling affecting the balance of power and capacity on the Singapore- Australia route.
For example the move to fly from Singapore to Australia will have to be done outside the Joint Services Agreement operated with BA and due to be renewed by the ACCC. But not before a discussion with interested parties in was convened and then adjourned to a date to be fixed on September 22 by the ACCC.
This is a so-called ‘pre-determination conference’ and was sought by Virgin Atlantic. Virgin Atlantic has protested at the Commission’s draft decision to extend the JSA for another five years. It has already been extended twice by the Commission. And its Australian ‘cousin’ Virgin Blue is also unhappy. Any move by Jetstar Asia to fly into Australia would be met by a request by Virgin Blue to start flying to and from Singapore.
Also Qantas still hasn’t said what impact the Jetstar Asia business will have on the operations of Australian Airlines, the so-called budget international carrier Qantas runs out of Cairns. Will they try and re-badge some of the Australian Airlines flights and capacity as Jetstar Asia?
Singapore already has a minority interest in the new Virgin Atlantic route of London-Hong Kong-Australia that starts soon through a 49% stake in the Richard Branson carrier.
That means the Singapore Government not only has control of Singapore Airlines, but probably the single largest stake in Qantas (all the big institutional holdings are on behalf of a myriad of funds and investors here and overseas). The Singapore Government will have 20% of Jetstar Asia and the stake in Virgin Atlantic.
That should be something to be considered by the ACCC when discussing the Qantas-BA JSA.
Meanwhile Qantas and the Flight attendants union met in Sydney on Tuesday for more talks on the new Enterprise Bargaining Agreement and the proposed London base. No announcement, so probably little progress in what has developed into a bitter set of negotiations, as a number of emails from Crikey readers in the past month, have underlined.
Now another Qantas employee, probably the fifth or sixth in the past two months, has provided a inside look at life as a Qantas employee at the moment. As Crikey has written before, there are signs of Qantas preparing for a Civil War, later this year:
The bleatings of a poor Qantas flight attendant
I am a Long Haul Flight Attendant working for Qantas, and I am most concerned (as the rest of my colleagues) that profits and HUGE bonuses have been put before people.
The same people who have not had a > pay rise for the past three years, who are given piddly bonuses (turns out we got $699 after tax from the $1,000 handed out with the profit announcement last month) and who are working on aircraft with one less crew member because we wanted the airline to survive. PLEASE! Surviving it is and making huge profits, but at whose expense? Ours of course.
We Flight Attendants have to constantly put up with all the managerial spin doctoring and being told how important we are to the company. This is while they are taking away our London base (which will set back those of us who do such trips by thousands a year from lost allowances), tell us we will not be flying to HK because the Domestic crew will be doing such routes and training strike breakers.
Gee, and we still have to smile at 3am at 30,000ft and put up with vomiting children, scared passengers, obnoxious travellers and the good ole jet lag that follows us around. Don’t get me wrong. I love my job and I consider myself to be a bloody good flight attendant.
It isn’t even about money. We just ask to be left alone. Why is it always the flight attendants who are chosen when there are cuts to be made? Many of us know that management hate us. From the times when James Strong called us the “sheltered workshop” to the present feelings our management have for us.
Our base wage is crap, so we rely on our allowances and the Long Range flying allowances. Take those away and we have nothing. In addition if we start having overseas bases (and you will see that if London goes ahead, then nothing will stop them from setting up other bases. There are based in Auckland and Bangkok) we are totally stuffed.
Cheap workers on contracts will be the norm, and I seriously doubt our kids will ever be able to have a job with Qantas. “And as for the “6 Million Dollar Man” (aka Geoff Dixon) well, may his tax returns come to haunt him. While we lay in bed wondering how we will pay our mortgage, he is wondering how he will be spending his bonus.
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