|
||||||||
  |
||||||||
|
||||||||
|
||||||||
|
||||||||
|
||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||
NZ Govt backs Air NZ-Qantas alliance
By Grant Holloway
WELLINGTON, New Zealand (CNN) -- The New Zealand Government has agreed to a proposal that will give Australian airline Qantas a key stake in its flagship carrier Air New Zealand. Under the deal, Qantas will take 22.5 percent of Air New Zealand and form a jointly controlled company which will manage all flights in to, out of and within New Zealand by both airlines. As a first step, Qantas will now subscribe for redeemable convertible notes in Air NZ representing 4.99 per cent of the company. The deal still requires approval by both the New Zealand Commerce Commission and the Australian Competition and Consumer Commission as it will result in a significant lessening of competition, particularly on the lucrative trans-Tasman route. This process is expected to take many months. The NZ government will see its stake in the Kiwi airline reduced to 64 percent from 82 percent. The government said that while it was concerned at the potential impact on consumers of any reduction in competition, it was confident the commerce commission could deal with those matters effectively. In a statement released Wednesday, the government said it had been advised the proposal would "not only deliver significant benefits to the company and its shareholders but would also be the best option for Air New Zealand to secure its position as an international airline". "The alternatives were found to be much less attractive in terms of revenue generation, cost savings and protection of Air New Zealand's competitive position. "This was particularly true given Air New Zealand's assessment that the most likely scenario, if the alliance was rejected, was that Qantas would enter a war of attrition against Air New Zealand which Air New Zealand would be hard-placed to win." Difficulties
The airline ran a real risk of being reduced to a domestic operation only with the government increasingly subsidizing any international operations. Air NZ and Qantas both welcomed the decision as an important first stage in a process which would see a stronger airline emerge. "Both airlines believe that by working together we can deliver substantial public benefits, adding real value for customers and shareholders, boosting tourism and enhancing the further employment and investment potential of both airlines," Qantas chief executive Geoff Dixon said Wednesday. The NZ government was forced to rescue Air NZ when it fell into difficulties after the collapse of its Australian subsidiary Ansett Airways last year. In contrast, Qantas is one of the region's most profitable airlines, posting a full-year net profit of $234 million in August. The airlines predict the merger deal will deliver synergies of up to $225 million by year three of the agreement and would add to earnings per share from 2003-04 onwards. Feeder trafficQantas and Air New Zealand will code-share extensively across their networks, including all New Zealand domestic flights, trans-Tasman flights and those between New Zealand and the Americas. Air New Zealand will get feeder traffic from Australia and access to the Australian domestic market. The deal also means that Australian-based discount carrier Virgin Blue will probably now not enter the New Zealand market. Virgin has said repeatedly that an alliance between Qantas and Air New Zealand would put its own expansion plans across the Tasman on hold. The alliance also strengthens the ability of Qantas and Air New Zealand to compete with other regional carriers such as Singapore Airlines, Cathay Pacific and Malaysia Airlines on long-haul routes to Europe. Shares in Air NZ were up NZ1c to NZ51c in afternoon trading on the NZ stock exchange while Qantas was also A1c firmer at A$3.76 on the Australian Stock Exchange.
|
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
