SIA is buying the stake from Rupert Murdoch's News Corp Ltd, which is ending a 20-year play in the Australian airline to focus on its media business. ``Our intention is to become not just an international airline but a global group of airlines and airline-related companies,'' SIA chief executive Cheong Choong Kong said. ``But Ansett is our first major investment in an airline and it won't be the last,'' he said.

Funding the buy entirely from its rich cash reserves, SIA expected Ansett to lift its profits from the first year. ``We're very confident that from the very first year Ansett will have a positive impact on our earnings, meaning that our share of Ansett's profits should more than cover the loss of the interest from the cash,'' Cheong said.

In the six months to end-September 1998, SIA, theAsia Pacific's largest airline outside Japan, saw its net profit buffeted by the bad times in Asia, falling to S$468 million (US$289 million) from S$616 million.

The widely anticipated deal, announced at a news conference, pairs SIA with Ansett's other half owner Air New Zealand, and is expected to fuel Ansett's ability to compete in Australia against stronger rival Qantas Airways Ltd.

Cheong said his company was committed to rapidly developing Ansett's domestic and international operations and stood fully behind Ansett's management. ``Ansett is a gem. It is an opal we would like to polish and bring to full radiance,'' he told the news conference. ``We intend to grow it as a major international airline.''

Ansett executive chairman Rod Eddington, who has turned the airline around in the two years since he took the top job, would remain with the airline for a couple of years. ``My major focus over the next two years will be to help the process of change to continue at Ansett,'' said Eddington, who washand-picked by News Corp to head the airline.

Ansett has about 48 per cent of the Australian domestic market and Cheong saw no reason why it could not overtake Qantas. Analysts said Singapore Airlines was primarily interested in Ansett Australia, which earned A$61.6 million after tax in the six months to end December 1998, up from A$41.7 million in the same period in 1997.

Cheong said he wanted the airline to remain Australia-based and wanted the board to remain largely Australia, but he also expected it to grow outside Asia, with the United States as an obvious destination. Ansett International, which flies to Bali, Fiji, Hong Kong, Osaka and Taipei, has yet to turn a profit but stemmed the flow of red ink to A$6.8 million in the first half of 1998-99 from A$26.7 million in the same period last year.

Ansett is set to join the Star alliance of airlines next Sunday with Air New Zealand, and Cheong said as a result SIA was increasingly likely to join the grouping later this year. The alliance links UnitedAirlines, Lufthansa, Scandinavian Airlines System, Varig, Thai Airways and Air Canada.

SIA's acquisition of News Ltd's stake should be completed in the second half of 1999, assuming it wins regulatory approvals, News Ltd chief executive Lachlan Murdoch said. Ansett Holdings, half-owned by Air New Zealand Ltd, owns 100 per cent of the domestic airline Ansett Australia and 49 per cent of Ansett International.