Dow Jones
Friday January 10, 12:14 PM
INTERVIEW: Air NZ/United -3: Cites Lower Costs
WELLINGTON (Dow Jones)--UAL Corp.'s United Airline's withdrawal from the U.S. to New Zealand route will make Air New Zealand more profitable, the New Zealand airline's chief financial officer said Friday.
United announced Friday it will stop flying the route from March 30 because it is losing money.
Air New Zealand's Shane Warbrick said Air NZ is turning a profit on the route and the United decision will make it more profitable.
"It's not an unprofitable route Auckland to L.A. for us," Warbrick told Dow Jones Newswires. "No doubt this will improve it."
Air New Zealand will increase its capacity on the route, he said.
"We'll have to find a way to increase capacity to make up for United," Warbrick said. Air New Zealand currently flies twice daily between Auckland and Los Angeles.
Warbrick said there has been a reduction in yields and passenger numbers between New Zealand and the U.S.
Warbrick said Air New Zealand had made a profit on the route where United had failed because it had lower costs. But he said he does not believe Air New Zealand squeezed United out of the New Zealand market.
Air New Zealand only heard of United's decision Friday and had not had time to plan by how much it would increase its capacity to the U.S., said Warbrick.
Following United's withdrawal, Qantas and Air New Zealand will be the only airlines flying direct from New Zealand to the U.S.
The two airlines signed a NZ$550 million deal in December for Qantas to take a 22.5% stake in Air New Zealand through the issue of new shares, and the deal will see the two airlines cooperate across all routes if it comes into force.
However, it needs approval from competition watchdogs in Australia and New Zealand and one of the factors they will be considering is the effect of the deal on competition.
Air New Zealand and United are both members of the Star Alliance airline group and Warbrick said Air NZ "will do everything we can to help United through this process," including taking passengers booked on United after it stops flying the route, said Warbrick.
Qantas currently flies once a day from New Zealand to the U.S., only half as much as Air New Zealand.
- By Christopher Niesche, Dow Jones Newswires; 64-4-471-5990;
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