DAE's Auckland bid hits hurdle

Dubai: Dubai Aerospace Enterprise (DAE) is running up against political opposition to its bid for the Auckland International Airport, according to a New Zealand newspaper.

The New Zealand government is against the proposed sale of the airport to DAE, the newly-formed $15 billion aviation conglomerate, and its trade minister said the deal could be "against national interests," reported the New Zealand Herald yesterday.

"The government's view is very much in line with that of 80 per cent of the Auckland public," the Herald quoted Trade Minister Phil Goff as saying.

"They don't want to see key public utilities - the airport and the ports authority, the shares in those bodies - sold off."

State-backed DAE has offered to pay up to NZ$2.6 billion ($2 billion) for a controlling stake in Auckland Airport, the country's main international gateway, and the board of the New Zealand company has backed the offer.

Dubai Aerospace Enterprise officials were unavailable for comment yesterday.

For some the political turbulence DAE is facing is reminiscent of a similar battle. Last year, DP World was forced to sell US port assets it bought as part of a takeover of Britain's P&O after US lawmakers said they had security concerns about the Arab state-owned company operating key infrastructure.

National issue

"As we stay in the States, all politics is local," said David Hamoud, president and CEO of the National US-Arab Chamber of Commerce. "And what we found in the DP World case, local interests were successful in creating a national issue. That tapped into a certain xenophobic strain that is not unique to the United States."

"DAE is a very well run company, and I think it has great potential and they have very ambitious aspirations. Inevitably from time to time, they are going to bump up against some resistance."

DAE scored a victory last week when it finalised its $1.9 billion purchase of two US-based aviation service providers, after a 90-day review by US regulators.

"In the case of its recent purchase in US, they laid the groundwork properly, with the commercial interests as well as the political interests," noted Hamoud.

That same delicate balance may now be critical to its success it New Zealand, with the pending sale requiring 75 per cent shareholders' backing and approval from the government.

The newspaper report said any government decision on the Auckland Airport sale would be made by Associate Finance Minister Trevor Mallard and Land Information Minister David Parker.

Last week, Foreign Minister Winston Peters told Reuters the proposed sale was "commercially shabby" and against national interests.

Under a deal put together by the Labour-led coalition, Peters, who does not hold a cabinet post, represents the government on foreign affairs but is free to voice different opinions in other policy fields.

-With inputs from Reuters