New Zealand Aviation NEWS: NZ Govt. May Reduce Stake In Air New Zealand

New Zealand Prime Minister John Key says the government will consider reducing the majority stake it holds in Air New Zealand, although he also says this ownership model has worked well and should be emulated with other state-owned assets.

In a major annual policy speech, Key said he has asked Treasury for advice on “the merits and viability” of reducing the government’s shareholding in the airline, which is currently about 75%. However, he stresses that the government would still retain a majority stake.

Such a move would not affect the company much. While it is the major owner, the government takes a hands-off approach to strategy and the running of the carrier. The government acquired the majority ownership in 2001 when the carrier was in dire financial straits.

“A change in the government’s shareholding while retaining a majority stake would have no influence on Air New Zealand’s business but would provide greater market liquidity for shareholders,” the airline says in a statement.

Key says the government is conducting a broader review of certain state-owned assets, to identify “where we have more money invested than we absolutely need to.”

He says the mixed-ownership model under which Air New Zealand operates, with a government majority stake but some private equity, “gives the best of both worlds.”

“Under this model, the government has a controlling stake in what is a crucial piece of transport infrastructure and guarantees that it will be majority New Zealand owned,” says Key. “But by not owning 100% of the airline, the government also has capital free to invest in other assets.” A similar model “could be extended to more of the government’s commercial assets.”

Key says under mixed government-private ownership, “Air New Zealand has been a creative and innovative company and a model corporate citizen … [and] has also offered some very competitive prices for air travel. I am convinced that Air New Zealand would not be run as well, nor provide as good a service to customers, if it was owned 100% by the government.”

NEHA JAIN

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