The debate surrounding foreign ownership of Air New Zealand has been further fuelled by the decision by Brierley Investments, a long-standing major shareholder, to reincorporate in Bermuda and move its headquarters offshore to Singapore.

Earlier this year, when the airline was vying with Singapore Airlines for a half interest in Ansett Australia, Brierley raised its stake in ANZ to 47%. That took it just over New Zealand's 45% limit on foreign ownership. Because 70% of Brierley is owned by foreign concerns, including an investment arm of the Singapore government, it had to transfer some of the ANZ shares to a local subsidiary. That was approved by the government, but Brierley's recent decision to leave New Zealand has raised new doubts.

New Zealand's two main opposition parties are questioning Brierley's arrangements. Jim Anderton, leader of the Alliance party, is vocal: "ANZ should be renamed Air Asia because it is no longer a New Zealand airline in any meaningful sense." There is a complex set of arrangements in which Brierley subsidiaries, and subsidiaries of its subsidiaries, hold ANZ shares. This allows Brierley to control 59% of ANZ's B shares, which are available to foreigners, plus 55% of its A shares, which are not, claims Anderton, with backing also from within the country's Labour party.

Sir Selwyn Cushing, who chairs both Brierley and ANZ, dismisses these concerns. He says they ignore the Overseas Investment Commission's conclusion that Brierley's relationship with its New Zealand subsidiary, BIL NZ Assets, is sufficiently "ring-fenced" to preserve local ownership and control. This includes requirements that BIL NZ directors are New Zealand citizens and three of them are independent of Brierley. Cushing adds that ANZ's independent directors also have concluded that BIL NZ satisfies the airline's requirements to own A shares.

But this does not satisfy Brierley's critics, who fear a rival airline, such as Qantas Airways, could exploit uncertainties over ANZ's nationality. Cushing responds that Brierley has "alternative plans" if ANZ's sovereignty is put in doubt, but he declines to spell out exactly what they might be.

Brierley's new chief executive, Greg Morgan, an Australian and former merchant banker, has even hinted Brierley might be prepared to offload its shares in the New Zealand flag-carrier. Morgan has already sketched out goals for aggressive growth, which he plans to achieve by selling more than half of Brierley's assets. That could include ANZ, he warns, if a new investment is seen to have more potential.

Source: Airline Business