SIA TO INCREASE STAKE IN AIR NEW ZEALAND–ANSETT GROUP

Subject to approvals by the Government of New Zealand and shareholders of Air New Zealand, and agreement on normal governance conditions, Singapore Airlines (SIA) will increase its shareholding in Air New Zealand significantly.

The Board of Directors of Air New Zealand today endorsed a decision of its Committee of Independent Directors that it is in the best interests of the company to strengthen the Air New Zealand–Ansett Australia airline group as an integrated business.

The Board and the Independent Committee reached this conclusion after considering reports from Salomon Smith Barney and its executive management on business strategy and funding options for the Group’s development over the next five years.

The Board’s Acting Chairman, Dr Jim Farmer, issued the following statement:

“Salomon Smith Barney’s appraisal of the business strategy for Air New Zealand confirmed that the existing structure, which includes 100% ownership of Ansett Australia, is the most desirable for the long-term success of the company.

“The Committee of Independent Directors and the Board are unanimous in their conclusion that the advantages Air New Zealand will derive from continuing ownership of Ansett Australia, and the operation and development of an integrated Australasian network, are significantly more valuable than any other option available to our company.

“As a consequence, the expansion of the capital base of the Air New Zealand-Ansett Australia group will be pursued.

“The Board and the Independent Committee are also united in the view that it is in the best interests of the company that Singapore Airlines increase its stake significantly in Air New Zealand.”

SIA will increase its shareholding through a placement of additional shares at a price of NZ$1.31 per share, being the averaged price of Air New Zealand A and B shares at the close of trading last Friday. SIA will also support a subsequent capital raising-programme by Air New Zealand.

Continued Dr Farmer: “We are convinced that the course we are now pursuing is not only in the best interests of all Air New Zealand shareholders but is also in the interests of New Zealand as a whole.

“A stronger Air New Zealand–Ansett group, supported by Singapore Airlines, will be more effective in developing valuable tourism business on a global scale as well as improved access to Australia, which is New Zealand’s largest source of overseas visitors and the most significant off-shore destination for international travel by New Zealanders.

“We are now starting the process of working with the Government on policy and regulatory issues that need to be addressed before arrangements for the development of a significantly strengthened Air Zealand can be finalised,” Dr Farmer said.

SIA’s Deputy Chairman and CEO, Dr Cheong Choong Kong, expressed confidence in the future of the Air New Zealand–Ansett group. “SIA welcomes the opportunity to play a bigger role in strengthening Air New Zealand and Ansett to better serve the New Zealand and Australian public. We believe that the group’s future in Australasia and beyond is extremely bright.”