Peter Costello

Foreign Investment Case: Acquisition by Air New Zealand Limited of the News Corporation's 50 Per Cent Interest in Ansett Holdings Limited

Approval has been given today, under the Government’s foreign investment policy, to the proposal by Air New Zealand Limited to acquire the 50 per cent interest held in Ansett Holdings Limited (Ansett) by The News Corporation Limited. This decision was taken by the Treasurer in consultation with the Deputy Prime Minister, the Minister for Transport and Regional Services in relation to the policy requirements of his portfolio responsibility. Also taken into account were a number of submissions on the proposal.

The Government’s decision in relation to this proposal is subject to conditions requiring that:

• Ansett and Ansett International Limited (Ansett International) will remain incorporated in Australia.
• Ansett will retain substantial headquarters in Australia and will also maintain its operations headquarters in Australia.
• To the extent consistent with its level of ownership in Ansett International, Air New Zealand will support:
  • Growth opportunities for the Ansett/Air New Zealand Group into and out of Australia being primarily exercised by Ansett International; and
  • Ansett International growing its international capacity consistent with commercial opportunities available to it as an Australian designated international airline.
• There will be no significant reduction in employment in Australia in highly skilled Ansett airline functions as a result of deliberate management strategies.
• There will be no significant reduction in regional airline employment resulting from changes to Ansett’s regional network or as a result of deliberate management strategies during the next three years.
• No regional destinations currently served by Ansett or its subsidiaries will lose service although service changes within the current Ansett network will be acceptable. The Minister for Transport and Regional Services will be fully consulted prior to the implementation of any changes.
• Australian citizens should comprise at least one quarter of the Ansett/Air New Zealand Board.
• Air New Zealand include in its annual reports during each of the next three years a statement outlining compliance with the conditions set out above. The need for this statement will be reviewed at the end of that period.

In addition, the following conditions attached to the Treasurer’s approval of 18 September 1996 for the acquisition by Air New Zealand of a 50 per cent interest in Ansett will continue to apply:

• Ansett International will remain substantially owned and effectively controlled by Australian nationals;
• Ansett International’s head office and operations headquarters will remain in Australia; and
• At least two thirds of Ansett International’s Board, including the chair, will be Australian citizens.

These conditions are designed to ensure that Ansett’s activities remain centred in Australia and contribute to strong competition in Australia’s airline carrier market. The conditions will ensure that there is no reduction in Ansett network services in regional Australia as a result of the transaction. They will also ensure that significant benefits will accrue to Australia as a consequence of Air New Zealand’s commitment to pursue growth opportunities for the Ansett/Air New Zealand Group into and out of Australia primarily through Ansett International Limited.

The Government has advised Air New Zealand that approval of this proposal is in acknowledgement of Air New Zealand’s stated intention to promote and develop Ansett and Ansett International as world class, competitive airlines within the Ansett/ANZ Group and that the Government supports this intention.

CANBERRA
13 June 2000

Contacts: Treasury
Ms Janine Murphy
(02) 6263 3763

Office of the Deputy Prime Minister and
Minister for Transport and Regional Services
Mr Paul Chamberlin
0419 233 989