Media Conference Following Air New Zealand Meeting with Government Officials

The following is a copy of the notes used by Gary Toomey, CEO of Air New Zealand, at today's media conference.

Air NZ has now lodged its formal submission - seeking the lifting of the current NZ Government limit on foreign investment in the airline.

What's at stake now - is the future of Air NZ, not just the future of Ansett.

We're talking about how we can sustain jobs for the 9,000 New Zealanders directly employed by Air NZ - and, beyond that, the jobs generated by the $1.1 billion we spend purchasing goods and services in New Zealand each year.

Air NZ needs to raise significant additional capital for its own development - and for Ansett - over the next five years.

We need to raise more capital than the NZ market can offer us - or we will wither away under the pressure of better-funded international competition.

The small size of the New Zealand capital market coupled with the current Government limit on foreign carrier investment in Air NZ - limit our ability to raise the funds we need to compete against larger carriers with larger home markets.

Those larger, better-funded carriers are encouraged to compete in the NZ market by Government policy.

We also need to be able to operate competitively in all sectors of the Australian market because we have a single aviation market across New Zealand and Australia - as a result of Government policy.

In considering our proposal, the Government is not making a commercial decision about which foreign airline should have shares in our company - or which part of our airline operations we should develop or sell.

It is legitimately concerned with three issues of national interest.

- Air NZ's continuing ability to access international markets under agreements it has negotiated with other governments;

- The impact of our proposal on airline competition in the NZ market; and

- The impact on the promotion of NZ as an international tourism destination.

Our proposals enable the Government to protect national and public interests on all three issues.

Singapore Airlines does not seek ownership and control of Air New Zealand.

Air New Zealand has no interest in putting its international landing rights in jeopardy.

A stronger Air NZ - Ansett Group will increase competition in the airline service market.

A stronger Air NZ - Ansett Group will be more effective in promoting tourism to NZ.

Australia is our largest source of tourists - 33% of all overseas visitors are Australians - and the numbers are growing at around 10% a year.

From our other major offshore tourism markets - there's heavy demand for dual destination travel to New Zealand and Australia.

Operating an integrated Air NZ - Ansett network enables us to tap both these sources of demand.

In terms of direct tourism flows to NZ - our five year plan involves growing our direct Air NZ international services to the key offshore markets at a sensible rate.

And we've told the Government we will do even more in Japan and the UK - if they can get us access to more landing slots at Tokyo and Heathrow.

So, we're offering the Government positive answers to the three questions of national interest that it's considering.

Because these issues are matters of public interest - we also commissioned a survey of public attitudes towards the proposal from UMR Research.

Our poll was conducted two weeks after the UMR poll published in this morning's National Business Review - and it explored attitudes in significantly greater depth.

We found there was a general awareness that Air NZ needs to raise additional capital - but not much knowledge of the financial issues facing the Group.

After people were given some information about what's proposed - and as you'll see from the Top-line Results report we're giving you it was quite neutral information - the survey found there was majority support for Singapore Airlines taking a bigger stake in Air NZ.

55% supported Singapore increasing its stake to 49% of the company's shares - with 39% opposed.

We then tested attitudes towards a series of conditions that the Government might require from SIA if they were allowed to take a 49% interest

These conditions are modelled on the kind of guarantees that Air NZ has had to give to acquire Ansett Australia and 49% of Ansett International :

* Retaining the Air NZ brand

* Not losing any international landing rights negotiated by the government

* Maintaining international routes of significance to NZ

* Maintaining services to provincial cities in NZ

* Servicing Air NZ aircraft at NZ engineering bases

* Staffing our flights mainly with New Zealanders

* Keeping Air NZ's headquarters in NZ

* Keeping a majority of New Zealanders on the Air NZ Board

Then people were asked how they felt about the proposal - if SIA was prepared to guarantee that it would observe those conditions.

Support increased to 68%

Opposition fell to 30%.

Summing up:

Our submission argues strongly that New Zealand national and public interests will be promoted by what we're proposing.

* International landing and market access rights can be protected

* Competition will be strengthened

* And so will the promotion of tourism to NZ.

Our public opinion surveying indicates that a majority of New Zealanders will support what we're proposing.

We think there's a very sound foundation for the Government to approve our proposal to continue the development of the Air New Zealand - Ansett Australia Group through a significant increase in shareholding by Singapore Airlines.