The Tasman was an integral part of the network and their New Zealand domestic operations would be much less profitable without it.
That quote sums it all up very nicely.
Air NZ have a number of very expensive aircraft on order and having a "no holes barred" fare war on the Tasman will severly diminish Air NZ's capacity for profit.
Where will this leave JetConnect?
At the moment they only have 20% of domestic NZ capacity according to the article.
If QF wanted to get really nasty they could further deploy the B737-800's to smaller cities in NZ and increase capacity with the B767 doing all of its primary trans Tasman flying (AKL,WEL,CHC).
Also they could deploy the older B737-300's (if any remaining) to Jetconnect and have them doing purely domestic flying in NZ which would increase their domestic capacity by some percentage points.
If Air NZ recommenced SYD-LAX direct which would not be profitable for a period, then bet your bottom dollar QF will retaliate accordingly.
In light of the above its in the best interest of Air NZ to do some sort of commercial arrangement to prevent them becoming a marginalised pacific nation airline.