Singapore Airlines increases Air

New Zealand stake to 15 per cent

Singapore Airlines (SIA) has

announced that it has reached agreement with Brierley Investments Limited (BIL) to acquire 16.7 per cent of Air New Zealand Limited (Air New Zealand) in the form of ‘B’ ordinary shares for NZ$2B5 million (Ss24o million).This amount is based on a price of NZ$3.OO per share.

The investment follows SlA’s purchase of 8.3 per cent of the share capital of Air New Zealand in the form of ‘B’ ordinary shares on April I 1,2000.

With 25 per cent of Air New Zealand, SIA will have a strategic stake in both Air New Zealand and Ansett Holdings Limited (Ansett). The New Zealand carrier already owns 50 per cent'of Ansett and will acquire the other 50 per cent soon.

Said SIA Deputy Chairman and CEO, Dr Cheong Choong Kong: “As evidenced by our recent 49 per cent stake in Virgin Atlantic, SlA’s ultimate objective is to become a global group of airline and airline-related companies. This stake in Air New Zealand and, indirectly, Ansett is another important step towards that goal.”

Dr Cheong said the investment consolidated the commercial alliance created by SIA, Air New Zealand and

Ansett in 1997.

“A stake in Air New Zealand gives us an even greater incentive to work closely with both Air New Zealand and Ansett to strengthen their respective positions as competitive Australasian airlines.

“As a leading global airline with a long history of service in New Zealand and Australia, SIA is well placed to make a positive and substantial contribution to the growth of both airlines, and to trade and tourism in the region,” he said.

“We want to become a strategic airline partner to both Air New Zealand and Ansett,” he added.

Dr Cheong said both Air New Zealand and Ansett would retain their strong brand images and national identities. “We are not seeking to change that in any way.

Both are excellent carriers. Through this equity partnership we intend to work closely with them to build on their strengths to make them a strong global, aviation force.”

Dr Cheong stressed this was not a takeover of or merger with Air New Zealand and Ansett.

“We would like to be an active participant at Board level and work closely with Air New Zealand management to create growth opportunities. The route networks of our

three airlines are complementary and, together, offers customers a wide choice of over 200 cities in the world. Staff of both airlines have everything to look forward to from this exciting partnership,” he noted.

The acquisition is subject to a number

of conditions, including regulatory

approvals, due diligence, and Air New Zealand completing its acquisition of the remaining 50 per cent of Ansett.

If these conditions are satisfied, the transaction is expected to be finalised by mid-2000.

Under the terms of a special earn-out arrangement, Brierley could be paid an additional NZ$O.5O per share (a total of NZ$3.5O) for the 95 million shares representing 16.7 per cent of Air New Zealand if the airline achieves .eSrnlngs before interest, tax, depreciation, amortisation and rentals (EBITDAR) of NZ$l.65 billion for the financial year ending June 30, 2001, or an additional NZ$ 1.00 per share (a total of NZ$4.OO) if EBITDAR reaches NZ$2.lO billion in the same year.

These EBITDAR numbers represent significant improvements of 30 per cent (for NZ$3.5O) and 65 per cent (for NZ$4.OO) over the EBITDAR for the year ended June 30, 1999. ■