News Corporation's Rupert Murdoch has agreed to sell his 50 per cent share in Ansett Australia to Air New Zealand for around A$500 million (US$365 million). But an announcement was delayed as Air NZ and its controlling shareholder Brierley Investments continued tough negotiations with the other Ansett shareholder, TNT, over management control.

Air NZ is bent on playing a significant management role and wants power of veto over the top five executive positions at Ansett. It also wants to secure a first option on TNT's 50 per cent share if the transport conglomerate decides to sell out at some future stage. Sources say Air NZ wants a set period for the departure of TNT, possibly about three years, to ensure it can fully realise the value of its investment.

Such a deal would alter the structure of Australasian aviation, opening the way for consolidation of the region's airlines into two major groups, one controlled by Qantas and the other by Air NZ.

One quandary is the future of Ansett subsidiary Ansett New Zealand, Air NZ's sole domestic competitor. Sources say the New Zealand Commerce Commission is unlikely to sanction the disappearance of Ansett NZ and a return to domestic monopoly.

It is understood Air NZ has suggested to the NZCC that Ansett NZ could be set up as a separate legal entity which would continue to operate on domestic routes. Analysts believe this is unlikely - however much Ansett NZ was put at arms length Air NZ will still be competing with an affiliated company, bringing into question whether true competition really existed.

One possible alternative is a partial buy-out of Ansett NZ by Qantas, which has indicated it is not interested in taking over Ansett NZ completely, but may consider purchasing or leasing its terminals. This would allow Qantas to operate its own domestic services in New Zealand, though only on major trunk routes.

Privately, Qantas officials say this would make sense, as it could then feed all its major NZ destinations. This could be done with domestic aircraft brought in from Australia or through domestic sectors being added to current international flights.

Meanwhile Ansett's earnings fell to A$70 million in the half-year to December and, after a loss in the March quarter, it will struggle to report a $90 million net profit for 1994/5, well short of the $151.7 million in 1993/4.

Source: Airline Business