Dixon has just paid HALF A BILLION dollars for something that nearly went down the drain recently!
If these executives are as clever as they wish us to believe (hence their large bonuses and salaries), WHY did Qantas sell the shareholding it had in Air New Zealand in the first place???
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Qantas sees big savings with Air NZ - The Financial Review
Nov 25 10:45
Jane Boyle and Giles Parkinson
Qantas and Air New Zealand this week will soon begin the tough task of convincing competition regulators of the merits of their proposed equity partnership after unveiling details of the deal on Monday.
The two airlines, which began negotiations 12 months ago, said Qantas would spend nearly $NZ550million ($491 million) to acquire a cornerstone holding of 22.5 per cent of the NZ carrier.
The deal involves Qantas buying shares in three stages - an initial convertible notes issue, an issue of shares taking its stake to 14.99 per cent, and a further 7.5 per cent stake to be bought at Qantas' discretion over the next three years.
Air NZ said it may also raise a further $NZ200 million in a rights issue, but any decision on this is expected to come after the airline's interim results are announced in February.
The NZ Government, which took 82 per cent of Air NZ last year after pumping in $NZ885 million to prevent its collapse after Ansett's failure, is likely to be left with a 56 per cent stake after the Qantas investment and rights issue.
The two companies estimate that the deal will deliver revenue and cost benefits of between $NZ450 million by year three and would be earnings per share accretive from 2003/04 onwards. Qantas shares were up 8¢ at $4.01 in early trade on Monday.
"This alliance will allow both airlines to compete more effectively in an increasingly tough global aviation market," Qantas chief executive Geoff Dixon said.
"Qantas and Air New Zealand together make up less than four per cent of the world aviation market and neither airline can ignore the forces of globalisation and consolidation that charaterise this complex and demanding industry," he said.
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Qantas and Air NZ are expected to lodge a formal submission with the NZ Government on the proposed alliance, plus applications seeking authorisation from the Australian Competition and Consumer Commission and NZ Commerce Commission soon.
The airlines will argue the alliance will benefit consumers by allowing the carriers to co-ordinate capacity, offering better and more frequent flight schedules.
It will also enable them to pool resources to launch services on new international routes that they have previously not been able to operate profitably.
As part of the deal, Qantas will take two positions on the Air NZ board, while Air NZ will have one representative - tipped to be chairman John Palmer - on the Qantas board.
The two companies will also form a group made up of an equal number of representative from each airline that will coordinate the entire air NZ fleet and Qantas flights to and within New Zealand.
However, Virgin Blue is firmly opposed to the deal, and is preparing to lodge a formal submission to regulators as soon as it examines the details.
Virgin Blue's head of commercial operations, David Huttner, argued a Qantas-Air NZ tie-up would damage competition and the tourism industry.
Mr Huttner said Virgin Blue had planned to launch Tasman and domestic NZ flights, but would not do so until it knew the outcome of the Qantas-Air NZ deal.
