=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2002/12/18/f= inancial0929EST0071.DTL ---------------------------------------------------------------------- Wednesday, December 18, 2002 (AP) Government agrees to alliance between Qantas and Air New Zealand if regulat= ors approve (12-18) 06:29 PST WELLINGTON, New Zealand (AP) -- The New Zealand government on Wednesday gave its approval for Australia's Qantas Airways to form an alliance with Air New Zealand, saying the deal would secure the local airline's viability as an international carrier. The deal, however, hinges on whether competition regulators in Australia and New Zealand give their assent to the proposal, which has been widely criticized as anticompetitive. The Australian Competition and Consumer Commission and the New Zealand Commerce Commission have said it will take at least four months before they make a decision. Under the decision by the New Zealand government, Qantas will be allowed to take an initial 4.99 percent stake in Air New Zealand and, if the regulators approve, increase that to 22.5 percent. The higher stake would allow Qantas to take two seats on Air New Zealand= 's board and let the companies combine some of their operations. Air New Zealand would also take one seat on the Qantas board. Rival airlines, industry analysts and air freight companies have criticized the plan, saying it would stifle competition. They say it could enhance Qantas' dominance of the Australian market and create a virtual monopoly in New Zealand and on services between the two countries. Finance Minister Michael Cullen acknowledged their concerns, saying "the government is aware that the proposed alliance will reduce competition in New Zealand and across the Tasman (Sea)." However, the deal was necessary to secure the local flag carrier's long-term viability as an international airline and give Qantas "a powerful reason to ensure that Air New Zealand is a successful airline," Cullen said in a statement. Air New Zealand almost collapsed last year but was bailed out by the government, which now owns 82 percent of the carrier. Qantas will pay 98 million New Zealand dollars ($51 million) for the 4.99 percent stake and another 500 million New Zealand dollars ($258 million) if regulators approve the additional 17.6 percent. The companies announced plans for the alliance in November, pending approval by the New Zealand government and regulators. The Australian government has no say in what the Australian regulator decides, but Transport Minister John Anderson signaled last week that he would like to see the deal proceed. Anderson said the competition regulators should consider the future of each airline if the deal does not go ahead and the need for a strong airline grouping in the region. =20 ---------------------------------------------------------------------- Copyright 2002 AP