Hope your right that AN will launch ok, the rumours,
Terry McCranns article, have everyone trying to
guess what the next installment will bring.
Sat "Weekend Australian"
Scene set for battle of the skies
By Steve Creedy and David Nason
February 23, 2002
VIRGIN Blue and the Lindsay Fox-Solomon Lew Tesna consortium last night ended merger talks, setting the stage for a three-way battle for Australia's skies.
The two disagreed on market strategy; Tesna insisted on a full-service airline and Virgin stuck with its budget model.
Virgin said it had determined that its financial interests, and the future needs of its staff and customers, were best served by remaining independent.
"At the same time, we believe Tesna has valid reasons to pursue its own goals," the airline said.
"Our decision should not be interpreted . . . as a statement about Tesna or its business plan. The talks that took place were both professional and amicable," the airline said.
Tesna spokesman Michael McLeod said the failure of the negotiations would have no impact of the Fox-Lew plans to resurrect Ansett.
"The agreement to engage in discussions with Virgin Blue was always based on the clear understanding that Tesna would remain committed to the completion of a sale agreement with the administrators of Ansett," Mr McLeod said.
"We now advise no agreements of any kind have been reached and the discussions have been terminated.
"Virgin Blue and Ansett will participate in a three-airline market, and compete for customers and market share consistent with their respective business plans."
Mr McLeod said he was not disappointed the talks had collapsed.
"At the end of the day, Virgin's view of the market, and what you have to do to get significant market share, is different to ours," he said.
He said the central issue for the Australian aviation market – for both operators and consumers – was the overwhelming market dominance of Qantas.
"Tesna holds the unambiguous view that the Australian market is fundamentally different to the US and European markets in terms of both the scale and relative costs," he said.
"Therefore, the opportunities for value-based airlines to be anything other than niche players is limited."
A statement from Virgin said it had always welcomed healthy competition and could be profitable in a three- or four-airline environment.
It noted it was one of only a handful of start-up airlines to return a growing profit in the first 18 months.
It would stick to the strategy it had maintained since day one, offering quality, low-fare service.
"In addition, if one looks around the world today, the airlines that are clearly succeeding are those that have stuck to the consumer-friendly, low-cost, South-West model," it said.
Tesna is expected to go to the Federal Court on Monday and reveal its plans for completing the sale.
It said last night it remained committed to the completion of the sale.