Rupert Murdoch has confirmed one of the worst kept secrets by selling his half share in Ansett to Air New Zealand, thereby further consigning Australia to the land of the corporate branch ofiice
In November last year Rupert Murdoch boldly declared that News Corp’s 50 per cent stake in Ansett was suddenly worth $1 billion. This was just a few months after he had signed up to sell the stake to Singapore Airlines for $500 million. The only thing that had changed was the surge in Qantas shares to $5 which Rupert declared meant his Ansett stake had appreciated by a similar amount.

With Australia already the most foreign owned modern western economy in the world, News Corp has now sold its half share in Ansett to Air New Zealand for $580 million in cash plus a deferred 10 per cent equity stake.

The sequence of events is very interesting. Firstly we have Richard Branson’s Virgin airlines getting completely walloped by the surging oil price such that its share price plunges by 70 per cent.

Then we have Air New Zealand, which is controlled by faltering News Zealand corporate raider Brierley Investments, scuttling the proposed Ansett sale by News to Singapore Airlines. News must be very thankful they did this.

Then Branson sends the Qantas share price into a tailspin by announcing he was setting up a budget airline in Australia. This simultaneously sent Rupert Murdoch’s $1 billion price tag out the window as the cosy and at times outrageous airline duopoly in Australia finally looked like being broken in a permanent way.

A few weeks later we see that Branson has sold control of his international airline to Singapore Airlines – the very same airline which still covets control of Ansett.

Then Air New Zealand turns around and buys News’ half share in Ansett for $580 million, meaning we have the most foreign owned airline industry in the world.

The final act in this play is surely Singapore Airlines taking a stake or control of Air New Zealand and therefore getting its hands on Ansett.

If they did this then surely Richard Branson would not set up in competition with his Singaporean friends in Australia. Maybe he never intended to, all the noise about his Australian entry merely being a ploy to drive the sale price of Ansett down and to damage British Airways at home by hurting the value of its 25 per cent owned Australian offshoot Qantas.

Whatever the case, Australian now has a predominantly foreign- owned airline industry, along with most other industries. We have 10 new names to add to our list of 110 foreign companies that generate more than $200 million a year in revenues out of Australia.

And we have not been able to come up with any more Australian companies generating more than $200 million a year overseas than the 38 we listed last week.

Our additions to the foreign list include :

– Salomon Smith Barney, Wall Street broking giants

-The Kwok family of Hong Kong which owns 333 Collins and is developing Darling Park in Sydney

– Japanese giant Itochu

– Canadian bank Toronto Dominion which are big players in the discount brooking business

– The Thakral family of Singapore which control the listed hotel group by the same name

– Mr CK Ow of Singapore who owns the Stamford hotel chain

– DBS Land or Singapore which controls Australand and now rival developer Walker Corp

– The Singaporean government through its investment arm and Singapore Telecom

– The Hong Kong and Shanghai Banking group

– Chase Manhattan bank.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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