Carmy, talk of a NZ/QF alliance is just that at the moment..talk. At this stage the NZ Gov't plan to hold onto NZ for a while. Down the track they may sell down to a cornerstone shareholder such as QF but not yet. There are also a number of competition issues that would need to be sorted out in NZ and Australia due to an alliance having a domestic monopoly in NZ and a trans-Tasman monopoly. QF seems to have the ear of the Australian government so this may not be a huge issue but once again we'll have to wait and see.
Dale is right when he says QF has the greatest strength to withstand another domestic bloodbath but even they would have little appetite for it at the moment given the losses they "claim" to be suffering on their international services. The jittery share price this week shows how much the market fears the damage a domestic price war could do to QF. Whilst currently cash rich they have the highest cost structure of the 3 so their ability to discount before entering a loss situation is less. Having said that, their virtual monopoly of high yield business pax does offer some protection in a price war. QF's biggest threat would be an attack on high yield pax by AN3.