Qantas to take share of Air New Zealand

25.11.2002
12.05pm
Air New Zealand confirmed today that Australian airline Qantas would take a 22.5 per cent stake in the New Zealand carrier.

Trading in Air New Zealand shares was halted by the New Zealand stock exchange this morning, pending the announcement by the airline.

The Government has an 82 per cent stake in Air New Zealand, and will have to approve the deal.

The Commerce Commission and Australia's regulatory authorities also have to give it the go ahead before it can take place.

The cabinet does not have to get Parliament's approval.

The National Party opposes Qantas taking a significant stake in Air New Zealand, and has said it will try to stop it.

Air NZ and Qantas confirm midday announcements

25.11.2002
11.40am
UPDATE - Air New Zealand and Qantas have both scheduled announcements for midday today (NZ time), virtually confirming speculation that the Australian carrier plans to take a stake in its New Zealand rival.

Air NZ has summoned union representatives to a meeting this morning, and confirmed a trading halt on Air New Zealand shares in Australia and New Zealand until midday.

The airline's chief executive, Ralph Norris, is expected to announce that Qantas will buy up to 25 per cent of Air New Zealand for between A$400 million ($450 million) and A$500 million through the issue of new shares.

Andrew Little, national secretary of the Engineering, Printing and Manufacturing Union, said he would be at the meeting.

"We haven't been told what the purpose of the meeting is ...it was news to me on Friday night to find out that it was possibly to do with a deal with Qantas," he said on National Radio.

"Our view is that Air New Zealand does need a partner like Qantas to ensure its financial security well into the future.

"An issue is going to be job security. We don't see job security with Air New Zealand remaining as it is...it needs to be solidly part of a bigger network."

Air New Zealand confirmed today that its shares will be suspended on the New Zealand and Australian stock exchanges until midday (NZ time) today.

The Government has an 82 per cent stake in Air New Zealand, and will have to approve the deal.

The Commerce Commission and Australia's regulatory authorities also have to give it the go ahead before it can take place.

The cabinet does not have to get Parliament's approval.

The National Party opposes Qantas taking a significant stake in Air New Zealand, and has said it will try to stop it.

"No matter what the terms of sale...we need to be asking if this is in the strategic interests of New Zealand," National's leader Bill English said yesterday.

"Almost no one, except Labour, appears to support the sale."

The sale of shares to Qantas could be the first step towards Air New Zealand becoming part of a big regional airline, the Dominion Post newspaper reported this morning.

It said Singapore Airlines, Qantas and Air New Zealand could be linked together to form a powerful Asia Pacific carrier.

Prime Minister Helen Clark had little to say about the speculation when she was interviewed on Newstalk ZB this morning.

"There has been no proposal put before (Finance Minister) Michael Cullen, who is the shareholding minister," she said.

Parliament is in recess this week and the cabinet is not holding its usual Monday meeting.

"There's no cabinet (meeting) and there's no proposal," Miss Clark said when she was asked whether the Government would discuss it.

- NZPA

MPs shut out of Air NZ decision

25.11.2002
By AUDREY YOUNG and FRAN O'SULLIVAN
A majority of MPs oppose a merger of Air New Zealand and Qantas.

But the Government has the power to approve the sale without putting it before Parliament.

A firm proposal for the merger is expected to be put to the Government today.

Finance Minister Michael Cullen needs only the support of the Cabinet to accept the proposal, allowing it to be sent for Commerce Commission approval.

Australian budget airline Virgin Blue, which has shown an interest in operating in New Zealand, says it will oppose the merger plan.

Most parties, including the Government's supporters, United Future and the Greens, declared themselves against the proposal yesterday.

Leaders of all parties except Labour and Jim Anderton's Progressive Coalition say the sale of a significant stake of the airline to Qantas will kill competition and lead to Australian control of New Zealand's national carrier.

Qantas and Air New Zealand are likely to declare an intention to compete within their domestic markets but to co-operate on transtasman and long haul services.

The Australian airline is seeking a stake of up to 25 per cent. The price could be $500 million.

Rather than sell part of its 85 per cent holding, the Government might allow Qantas to buy additional shares, reducing the stake of all present shareholders.

Air New Zealand refused to confirm that the deal, long under discussion, would be announced today.

Chief executive Ralph Norris said nothing had been signed.

"There is a lot of speculation and I am not willing to comment at all."

Any agreement would be announced to the Stock Exchange, and the airline could also ask the exchange to suspend trading for the day, he said.

Shareholders would then have to agree to the deal, and it would have to be approved by the Commerce Commission and the Australian Competition and Consumer Commission.

The airlines would have to prove to the Commerce Commission that some level of competition would remain to keep fare prices down.

Yesterday, National Party leader Bill English vowed to work with the export and tourism industries to stop the deal.

It made no sense to sell part of Air New Zealand to one of its "fiercest rivals", he said.

"Almost no one except Labour appears to support the sale."

United Future leader Peter Dunne said Qantas' strategy over 60 years had been to marginalise and dominate Air New Zealand in the international market.

If the aim was to get capital into the airline then much more could have been done to investigate whether other parties might have been prepared to invest, possibly through a public float or a homegrown consortium.

New Zealand First leader Winston Peters believes the deal will result in a virtual transtasman monopoly, penalising the travelling public and eventually the taxpayer.

Act's leader, Richard Prebble, said the Government would be in the worst position - being an investor but no longer in control.

Greens co-leader Rod Donald said that if the airline needed another equity stake not held by the Government, it should be held by New Zealand businesses and individuals through a float.

Mr Anderton refused to comment until after an announcement but as a Cabinet member, he is expected to support the Labour view.

Labour and the Progressive Coalition have 54 votes, or 45 per cent, of the 120-member Parliament.

Virgin Blue's head of commercial operations, David Huttner, said it would be hard for the budget airline to invest in New Zealand if the Government did not protect competition.

Virgin Blue has had preliminary talks with the commerce commissions in New Zealand and Australia and now will make formal submissions on the proposal.

"Air New Zealand a year ago were in a tough situation, but they are not now," said Mr Huttner. "So why do they need this deal? This is just a business deal. It's not for the country or competition.

"The NZ Government has invested in a company that was in dire straits a year ago and now they are getting a great return on their investment. Except for the fact that the shareholders of the investment, the taxpayers, are the ones that will be belted by higher airfares in the future."

additional reporting by Cathy Aronson and Ainsley Thomson

Government keeps its distance from Air NZ announcement

25.11.2002 10.19 am

The Government is keeping mum on Air New Zealand's expected announcement that it is selling a stake to rival airline Qantas.

Prime Minister Helen Clark had little to say about the Auckland press conference which the airline has called for noon today.

The Prime Minister is wary about discussing Air NZ after she was investigated by securities watchdogs over her comments during last year's bailout of Air NZ by the Government.

She was accused of insider trading after telling journalists she thought small shareholders should hang on to their stake.

"There has been no proposal put before (Finance Minister) Michael Cullen, who is the shareholding minister," she said today.

Parliament is in recess this week and the cabinet is not holding its usual Monday meeting.

Dr Cullen has said in the past he is not opposed in principle to a partial sale of shares to Qantas but that he would not change any competition laws to ensure the deal gets the okay from the Commerce Commission.

He has also said he envisages the Government being the majority shareholder for the forseeable future.

The problem for Dr Cullen has been Air NZ's need for airline partners and in particular more cash for new planes.

In cabinet, Dr Cullen acts as shareholding minister, while his associate finance minister Trevor Mallard deals with wider issues such as whether the sale is in wider interests of the country.

A spokeswoman for Dr Cullen said the Government was prepared to consider any deal, which would only need the approval of the cabinet and not Parliament.

"In terms of where the Government sits, we have been aware for some while, because Ralph Norris said so publicly, that Air NZ wants to run something up before Christmas," she said.

"So as a consequence, the Government has sought and got advice about the appropriate procedures to handle a proposal, as and when we receive it, but the Government at this stage has not received any form of proposal from Air NZ."

The Government owns 82 per cent of Air NZ after injecting $885 million into the airline late last year after its Australian subsidiary Ansett collapsed.

Some Opposition politicians are sceptical about Qantas taking part of the Government's stake or being issued new shares. They believe it will reduce competition in New Zealand and are suspicious of Qantas's role in the near liquidation of Air NZ. National is hoping to hold a symbolic vote in Parliament to test whether the sale has political support.

Air NZ chairman John Palmer has promised any Qantas deal would not compromise the principles of majority ownership and control of the company.

Among the issues believed under discussion with Qantas were how to get the deal past competition regulators in both New Zealand and Australia, and how to get Air NZ to switch from the global Star Alliance to the alternative Oneworld grouping.

Benefits from an equity deal with Qantas could include a $450 million capital injection and feeder access to and from the all important Australian market.

Analysts say the Government, as Air NZ's major shareholder, has to weight the value of its shares versus the desirability of aviation competition.

But independent aviation analyst Bruce McKay said it was not necessarily a given that Qantas would be able to influence Air NZ's long-term strategies.

He told National Radio the deal was being portrayed as a merger "when it's not".

"Qantas is taking a minority stake in Air NZ and getting a couple of board seats. It comes down to how much influence Qantas will have on Air NZ beyond a seat at the table.

"The issue really comes down to what sort of agreement Qantas is prepared to enter into with the Government as the major shareholder, and what sort of controls or ring-fencing will be put around various bits of the Air NZ operation to stop Qantas' influence from extending its tentacles right down into the long-term management planning of the company."

Mr McKay said the Government had made it clear that as the regulator, as opposed to being a shareholder, that it did not want a deal that would create too much fuss.

"So the Government has clearly stated the rules in terms of what it wants to see... setting aside its other interest as a shareholder."

- NZPA

Highlights from Chairman John Palmer's speech today:

Under the alliance all the airline activities of Air New Zealand will be combined with those parts of Qantas which operate to, from or within New Zealand, under the commercial management of Air New Zealand.

Air New Zealand considered two strategies, that of joining with another airline and then competing against Qantas, or working with Qantas and competing as a strong alliance. The Qantas alliance offered the best outcomes, both from the company's, and the national interest, perspective.


The name Air New Zealand will remain and the Koru symbol will continue to fly proudly to major international destinations.

A stand alone Air New Zealand is possible in the short-term but to think in the long-term we can be globally competitive with a New Zealand home market of four million people is unrealistic.

The alliance will be supported by an injection of approximately up to $550 million in new capital from Qantas who will subscribe for sufficient Air New Zealand shares equating to up to 22.5% of the Company's enlarged capital.

The co-ordination between the companies will be further strengthened by reciprocal Board representation. One director of Air New Zealand will be invited to join the Qantas Board and, reflecting their equity interest, two directors will be nominated by Qantas to join the Air New Zealand Board.

In addition we will be exploring with Qantas code share opportunities across their network.

Air New Zealand sees for itself a future in which it:

• Takes New Zealand business and its trade and produce to world markets, and New Zealand travellers to international destinations
• Substantially increases the extent and effectiveness of the marketing of New Zealand as a tourism destination, bringing increasing numbers of tourists and visitors direct to New Zealand
• Provides domestic travellers with a world class and affordable service
• Retains its autonomy and identity
• Protects the commercial integrity of its Express Class, trans Tasman and long-haul services, and critical customer benefits such as Airpoints
• Provides a robust basis for growth.

The alliance between Air New Zealand and Qantas was concluded following nearly a year of consideration and testing of a number of alternatives. None provided the benefits that the Qantas alliance creates.

This alliance is a one time opportunity for New Zealand and Australia to co-ordinate our major airline resources and create a competitive, international airline operation with the interests of this region at its heart.

The other regulatory and shareholder approvals necessary to proceed are expected to be resolved in the first half of 2003, at which stage the alliance will come into being.

Thanks for posting all this TG! I haven't had time to read and digest everything yet, so I won't make much comment.

Here are some more reports:

Sydney Morning Herald: http://www.smh.com.au/articles/2002/11/25/1038173673340.html

News.com.au: http://www.news.com.au/common/story_page/0,4057,5554503%255E2,00.html
http://news.com.au/common/story_page/0,4057,5554495%255E2,00.html

Australian Financial Review (Subscribers Only): http://afr.com/premium/companies/2002/11/25/FFXSGFJ8X8D.html

V/F

It said Singapore Airlines, Qantas and Air New Zealand could be linked together to form a powerful Asia Pacific carrier.

I'm sensing Star is trying to pull Qantas away from oneWorld...

In a way, I'd love Qantas to be part of Star.

In another way, I'd like the resultant pressure of Qantas AND ANZ merging and becoming a Oneworld stronghold to force the "SQ Australia" issue, or furthering the rumors of Virgin Blue and a future Virgin Pacific growing forcefully and maybe allying with Star.

N

I'm right with you, Gigneil. This may finally push SQ to pull their weight in the Australian scene. Talk is cheap.


Andrew

Keep sensing, but it is not going to happen...

Simple logic dictates against Qantas leaving oneworld.

Points in favor of the argument that Qantas will join Star:

•Pronouncement by Dr. Cheong, CEO of Qantas' rival Singapore Airlines, that Star could possibly lure Qantas away from oneworld.
•Air New Zealand's claim that their alliance with Qantas does not bear on their membership in Star
•The ravings of Star Alliance partisans on this board

Points in favor of the argument that Qantas remains in oneworld and eventually pulls Air New Zealand out of Star:

•BA's ownership stake in Qantas and BA's seat(s) on the Qantas Board of Directors
•BA's and Qantas' joint hub operations in Singapore
•Qantas' alliance with AA - Why would Qantas join Star and begin codesharing with United if the alliance with United would mean that Qantas would end up having to cut frequencies on US-Australia routes at the behest of US regulators who would never approve of a Star monopoly on US-Australia routes? At the moment, United only provides token competition on the US-Australia routes. So, Qantas gets everything and more from the US market with its alliance with AA, a carrier that does not directly compete with Qantas in any transpacific markets. If Qantas were to join Star, not only would it be forced to cut frequencies and welcome a new US competitor (ironically AA itself), but within the Star alliance itself it would end up being in direct competition with two other carries, Air New Zealand and United.
•More on the relationship with AA. Qantas has been able to expand its flights at LAX in part because AA has allowed it the use of two gates and their customs facilities in AA Terminal 4. The use of those customs facilities has made it more convenient for Qantas passengers to transit through LAX. Next year, Qantas will be sharing club facilities with AA when the new Admirals Club and Flagship Lounge opens. There are simply no opportunites at LAX for Qantas to achieve this level of cooperation with any Star Alliance carrier. United's facilities at LAX are inferior to AA's and not as well situated as AA's.

On the other hand, the writing is on the wall. If Qantas and Air New Zealand are planning to codeshare on all domestic and International services, it is only a matter of time before Air New Zealand announces its membership in oneworld.

In the game of alliances, I think oneworld gets revenge on Star. Air Canada took Canadi>n, Qantas takes Air New Zealand.

Ladevale pretty much backs up my point.

Why would Qantas join Star and begin codesharing with United if the alliance with United would mean that Qantas would end up having to cut frequencies on US-Australia routes at the behest of US regulators who would never approve of a Star monopoly on US-Australia routes?

Part of the reason QF/AA works so well is that AA does not serve Australia, hence, all of AA's pax transfer to QF. If QF moves to United and Star, then this advantage drops.

Since QF does have 22.5% of Air New Zealand, aren't they still the minority share holder?

blink

I think NZ may stay with Star and Qantas with oneworld. NZ gets lots of benefits being a part of the Star Alliance and Qantas gets similiar benefits being a part of oneworld. So looking at it in a different way: What would oneworld gain by having NZ join ? Not that much really; QF already serves the most important points in New Zealand and also to the islands in pacific like NAN etc. What would Star gain by having QF join ? More access to the Australian market but NZ does have lots of flights there and SQ and TG has lots of flights from other points in Asia. OZ flies there from Northern Asia who will join soon. I don't really think BA would let QF leave but don't really see NZ leaving Star either. Best BUSINESS decision is for both to stay in their respective alliances and to cooperate with each other. Other oneworld and Star carriers does have relationship with other partners outside the main alliance and same could happen here. Just some thoughts...The777Man

I think it stands to reason that Star would gain tons and tons from having QF join... they've stated repeatedly that especially SQ is losing millions and millions by not having a domestic feed in Oz.

I don't think ANZ, SQ, TG, and OZ represent a substatiative enough domestic feed for the entire alliance.

I'm not saying QF should or will join Star... I think they won't. But if they don't, Star needs to take some major action Down Under.

All the PR says that QF and NZ are launching a large-scale alliance as a result of this deal. Wonder what that means...

N

SIA can step in if the deal fails though

SIA can step in to buy part of ANZ if the Qantas deal falls thru?

Can it fall thru at this point? Sounds like most of it has been signed and doesn't require any additional govermental approval... does it?

Heh this is probably pointless speculation at this point, but how would that affect their "SQ Aussie" plans?

This needs a new topic... I'll start it.

N

Gigneil - It is conditional on the approval of the government (which they will likely get) and the approval of both the New Zealand Commerce Commission and the Australian Competition and Consumer Commission (which will be somewhat harder to come by). So at the moment, it isn't a done deal...

V/F

An ""effective merger," said Virgin Blue. "It effectively turns the domestic aviation industry in New Zealand into a monopoly. "New Zealand was going to be our first international destination. Needless to say, it's been put on the backburner."

Reuters / Yahoo

BA is happy with QF stage. Qantas woman doesn't say anything when asked if SIA would buy BA's stake if the latter decided to sell.

Dow Jones / Yahoo

"The proposal immediately raises competition concerns for the ACCC," says an ACCC spokesman. The equity stake "appears to include strong elements of anticompetitive arrangements including price-fixing and route-sharing." A final decision isn't expected "for some months."

Dow Jones / Yahoo

"I don't see how both companies can be managed by the same team and consider themselves competitors." NZ's National Party "vowed to fight the alliance"

Reuters / Yahoo

Reuters / Yahoo summary

SIA can step in to buy part of ANZ if the Qantas deal falls thru?
I doubt it very much, AirNZ has already cost/lost SIA a small fortune.

An ""effective merger," said Virgin Blue. "It effectively turns the domestic aviation industry in New Zealand into a monopoly. "New Zealand was going to be our first international destination. Needless to say, it's been put on the backburner."
Why put it on the backburner, if there product is so good and cheap what have they got to lose?

As for the ACCC, the minister for Qantas will put them in their place.

Rmm

Heh heh. Looks like QF really outwitted the Doctor up in SIN this time!

Yes, why shouldn't NZ stay in Star?

Then, because QF & NZ will give points (miles) to each others flyers, a Star member flying QF will get points (if they are a NZ frequent flyer), and a OW member flying NZ will get miles (if they are QF member)...

So, in effect, QF & NZ will be in both alliances (as far as earning mileage goes) but only for their own members. Clever.

"what have they got to lose?"

Well obviously a lot of money. Even if their product is good, they have little realistic chance of breaking into the NZ market / trans-Tasman market now.

"As for the ACCC, the minister for Qantas will put them in their place."

'Tis true, 'tis true.

----
Qantas (QAN) well off day's highs, investors fretful of regulator comments issued around midday, says senior institutional dealer. "The market will wait until they get ACCC approval," dealers says, adding, "I would be shocked" if ACCC Chairman Allan Fels didn't green light despite Virgin Blue protestations. "I can't imagine they (Qantas and Air NZ) would go this far without having a fair idea how Fels would react,"

Dow Jones / Yahoo

"In addition, the ACCC will review the Joint Services Agreement currently struck between Qantas and British Airways, which is due to expire in the middle of 2003. This allows price-fixing on the so-called Kangaroo Route between Australia and Britain".

Australian Comepetition and Consumer Commission.

Australian Transport Minister John Anderson said Monday a proposed equity alliance between Qantas and Air New Zealand will need to demonstrate a significant public benefit.

Dow Jones / Yahoo

"It represents an excellent outcome for the country, for the traveling public, for New Zealand exporters and business people, for all our shareholders and for all of the staff of our airline," said John Palmer, Chairman of ANZ

Dow Jones / Yahoo

"Since it appears that Qantas will have a majority of non-government outstanding shares...that will give them (Qantas) effective strategic control of the airline since the New Zealand government is not an active shareholder. What it basically means is that Qantas gets to run the show."

"We look forward to them trying to justify these actions as anything more than monopolistic attempts to control the Trans-Tasman market."
- Virgin Blue

Dow Jones / Yahoo

Wouldn't NZ's continued commitment to Star sort of make Qantas an unofficial half-member?  

The other operational impact as a result of this "strategic alliance" (nice corporate euphemism there, btw, NZ and QF!) I'm interested in are their operations in and around Australia and New Zealand. At most major airports they have two separate lounge facilities for premium customers and at Sydney even operate from two different piers. It doesn't make a lot of sense to me anyway, to keep this arrangement going if they want to be perceived as working together.

Singapore_Air,

I don't think the real money lose will come from flying trans tasman in the case of Virgin Blue. If you have a look at the overall time frame for the QF/NZ deal, it ties in nicely with Branson's plan to float his 50%. No need to say what this will do to the share price. Much of their expansion is dependent on this.

Rmm

I'm sure this deal has to rank as one of the world worst kept secrets. The big question is how are the 2 airlines going to sell the "competition" angle, since effectively they have a monopoly in NZ, and almost a monopoly on the Tasman.

Hmm, what happened to DJs rantings and ravings about busting up monopolies.

I cant see SQ being happy with QF joining *A, Im just thinking "why would QF feed SQ? when they are competing on the same route? wouldnt it be better to keep them on QF metal?" might see the same thing happen to SQ as what happened to TG when SQ entered.

There are too many * carriers on the EU to AU route, its all going to end in tears if QF enters star ( which i really cant see happenin )

NZ political parties "National, Act, the Greens and United Future are all warning the deal is anti-competitive."

"Consumer watchdogs on both sides of the Tasman have also spoken out against the alliance."

"David Russell of the New Zealand Consumer's Institute says the deal will create a virtual monopoly which hasn't got "a hope in hell in its present form". "I know of no monopolist who hasn't taken advantage, at some stage, of their position. Why the heck shouldn't you. I mean you've got a fiduciary to your shareholders. If you're losing money on your international fares, why don't you make it up on your domestic fares," Russell says."

"This is not a takeover," says Air NZ Managing Director Ralph Norris.

One News New Zealand

""If you think about the underlying arrangement, in one sense it goes further than that because they propose to agree on things like prices, capacity schedules and so on.

"So I don't think anyone is pretending that there won't be the closest cooperation and that there won't be anticompetitive effects.

"The question is whether or not the benefits, in this case from our point of view the benefits to the public in Australia from the proposal, would warrant it despite the harm to competition,"" - Alan Fels of the Australian Competition and Consumers Commission.

Dow Jones / Yahoo

"It's pretty much the case. Legally they can't merge but what they are doing in effect, it appears, is merging a lot of their operations,"" - Ross Jones of the Australian Competition and Consumers Commission - Mergers and Acquisitions

Dow Jones / Yahoo

"A vast array of interested parties from flower exporters, consumer lobbyists, travel agents to competition watchdogs were commenting today on the proposed deal and few had a good word to say."

""Essentially we have a monopoly on our doorstep and a monopoly has the opportunity to lift prices as they see fit,"" - David Russel, NZ Consumers Institute.

""There is just not enough competition and prices have shot up dramatically. If you look at the average Canadian air traveller, they are being stung badly. I just can't see whatever way you look at it that the New Zealand consumer is going to win from this,"" - Professor Simon Mine, Auckland University of Technology

"He said this deal was politically more palatable to the Government, with ethnic and cultural factors counting against the Singapore deal." - referring to financial analyst David Stone.

"it was strange that the Government was prepared to make a quick decision on the Qantas proposal while last year, when the airline was facing bankruptcy, it dragged its feet over the Singapore Airlines proposed bailout." - referring to David Stone.

""We will not walk into a monopoly," chief executive officer Brett Godfrey said." CEO of Virgin Blue

NZ Herald

I think oneworld gets revenge on Star. Air Canada took Canadi>n, Qantas takes Air New Zealand.

oneWorld can't blame Star. It was the Canada's law the makes oneWorld lost Canadi>n.

"Hawke's Bay air passengers will probably have to pay more for their tickets after Air New Zealand and Qantas merge, says former Air New Zealand chief executive Jim Scott, of Napier."

"It would be a second-rate arrangement, compared with the global alliance that the Government scuttled with Singapore Air, Mr Scott said. "

"He said Air New Zealand would be owned by "two ugly sisters," and that though "the government was bad enough, Qantas was worse","

"Former Air New Zealand chairman Sir Selwyn Cushing, said the deal with Singapore Air would have been a better one for New Zealand, and the two airlines would have competed on only one route - New Zealand to Singapore"

"He said the climate for the alliance between Qantas and Air New Zealand was not good and he was concerned about Qantas's record in past deals with Air New Zealand"

MyTown.Co.NZ

Any news on how the QFFF and the NZ Airpoints are going to be integrated? Also things like lounges and schedules etc etc?

Jimmy

Singapore_Air, as much as I appreciate your news flashes, it's abit too much, don't you think?

Air NZ will fit into oneworld pretty nicely, they are in line with Qantas plans to fly DFW-AKL, and the current Santiago-New Zealand flights....

It's pretty much a done deal, I think! And with the current government, they can do it...... not much opposition there (they can't do anything).

Jesseycy - It is hardly a done deal - expect plenty of concessions to be required by the ACCC and the NZCC, and expect Virgin to reap the benefit of some of those (why else do you think they are stamping their feet at the moment). I think the deal will eventually go through, but not in the form presented on Monday.

I agree with the expressions here that Singapore Airlines would have been a much better choice, of course that is unlikely now. However, perhaps if this drags on for a while through regulatory approval, Singapore will pop up again, and give Qantas a taste of its own medicine in stuffing up a deal that is close to done (remember June 2001...)

To TG992 and all other NZ employees, good luck, and I hope that whatever the outcome is, it is good for you guys...

V/F

According to The Times today:
====
Before the deal was "done", Qantas apparently refused to rule out leaving OneWorld to join Star Alliance if their bid for part of Air New Zealand was successful. If Qantas did now join Star, British Airways would almost inevitably feel it necessary to divest itself of its interest in Qantas, leaving the way clear for Singapore Airlines to strengthen its influence in Australia.
====

So where does that leave things?

Actually, its difficult to see what real value NZ adds to OneWorld - they may end up joining simply because of the shareholdings, but they don't really add that much to OneWorld's global network that isn't already covered by Qantas. On the other hand, Star loosing NZ would leave them with a big gap in the south Pacific, and gaining Qantas would strengthen them alot. OneWorld is rather weak in middle-Asia as CX is rather too far towards the edge of it, whereas TG and SQ form a strong platform for Star in that area. Should OneWorld loose QF, it would be a big blow for them as they would be able to offer very little in the way of networks inbetween Europe and Hong Kong.

So, my thoughts are that OneWorld really needs another Asian carrier (more in the Singapore, Thailand area) and doesn't gain much from NZ but needs to hang onto QF, whilst Star could be damaged by loosing NZ but would gain alot from QF joining. Expect some serious lobbying in both alliance camps -this game isn't necessarily over yet!!!

Andy

The airlines will codeshare on flights to the US and within Australia as part of a five-year agreement that is expected to produce savings of up to $A402 million within three years. Air New Zealand will handle the commercial management - including pricing decisions - of all operations of both airlines within, and to and from New Zealand.

Dixon said Qantas would keep flying its own five B737 aircraft on New
Zealand domestic routes for now - although he would not guarantee
previous plans to add two more - with separate booking arrangements and levels of service.

In 1997 that Qantas sold a 19.9 per cent stake in Air New Zealand
because of its inability to wring operational cooperation from the stake and over the hostile attitude of the NZ airline's board. Air New Zealand managing director Ralph Norris said the previous structure could not be considered a partnership, and that new alliance was founded on common objectives. "The Air New Zealand board and management at that time saw the entry of Qantas on to the register as hostile," Norris said. "It was not an arrangement that had any shared objectives or any common strategy underpinning it. This is completely different."

Qantas chairman Margaret Jackson said the boards and management of both
airlines were unanimous in their support of the alliance. Qantas will have
two directors on the Air New Zealand board and Air NZ will have one seat on
the Qantas board. * The deal is conditional on approval by the ACCC, its New Zealand counterpart, shareholders in Air New Zealand, and the New Zealand Government.

Australian Competition and Consumer Commission chairman Professor Allan Fels
said it appeared to include "strong elements of anti-competitive arrangements including price-fixing and route-sharing"."It will certainly need very close scrutiny," he said. The ACCC is concerned the Qantas-Air New Zealand alliance would tie up 63 per cent of flights to the US from the South Pacific and dominate the Tasman and New Zealand.

Virgin Blue, which said it was planning to enter the New Zealand
market next year, said it would be unable to compete against a Qantas-Air NZ monopoly.

Seismic shifts underlying the global airline industry could see Qantas
abandon its Oneworld alliance partnership for the Star Alliance, of which
Air NZ is a member. Qantas chief executive Geoff Dixon said that Qantas was happy with Oneworld, however Qantas is reviewed every six months. So we will have to wait and see.

Hope it all works for everyone.

QFTJT