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