Air NZ approves Singapore Airlines bid

WELLINGTON, New Zealand -- The board of Air New Zealand has approved a bid by Singapore Airlines to significantly raise its stake in the company.

SIA says it will raise its 25 percent holding in Air New Zealand through a stock placement of NZ$1.37 a share.

That's a 19-percent discount on Tuesday's closing price of the New Zealand carrier's unrestricted B shares.

The New Zealand government must now approve the deal, which has been criticized by rival bidder Qantas airways.

It says that since SIA is owned by the Singapore government, it would gain an unprecedented influence over the aviation industry on both sides of the Tasman Sea.

Air NZ -- which has been hit hard by rising fuel prices, a weak domestic currency and stiff Australian-based competition -- has been the focus of intense speculation after Qantas proposed buying a stake in the airline.

Qantas had proposed selling Ansett Australia, which is in need of a major fleet overhaul, to Singapore Airlines.

Alliance building

On Thursday Qantas chief executive Geoff Dixon said the Australian carrier was "focused on the opportunity to establish a partnership with Air New Zealand which would strengthen the international competitiveness of both airlines."

He said the proposal was part of the airline's pursuit of bilateral and global alliance arrangements with British Airways and other oneworld alliance partners.

Singapore Airlines will now seek approval from the government in Wellington to lift its stake in Air NZ above the 25 per cent limit imposed on all non-New Zealand investors in the company.

The move, if given government approval, would make it much harder for Qantas to buy a controlling stake in Air New Zealand.

Singapore Airlines executives are expected to meet New Zealand Prime Minister Helen Clark later this week to lobby for the lifting of the ownership limit.