Pretty strong words from across the ditch...
QANTAS has been accused of creating a misconception that it is about to go broke while making "outrageous" and "offensive" attempts to label Air New Zealand as a predatory, state-owned airline seeking its destruction. In the first public comments by any of the three airline investors in Virgin Australia, Air NZ chief executive Christopher Luxon accused Qantas of orchestrating a crisis that had hurt its brand as well as undermined the confidence of its customers and employees.
"I think it's quite outrageous and frankly quite offensive to be positioning Air New Zealand as a predatory state-owned airline wanting to cripple and hurt Qantas," Mr Luxon told The Weekend Australian. "Our strategic rationale for investing in Virgin is extremely clear and has remained unchanged. We want to be able to have exposure to markets across the whole of the Pacific Rim and weight our assets and our market risk accordingly.
"The other thing for us is it's a natural investment because it's a very large connected, adjacent market to New Zealand."
Far from the picture painted by Qantas, Mr Luxon said Air NZ was a listed company that acted commercially and rationally at all times. He said it was a more efficient use of Air NZ's capital to invest in Virgin than to attempt to start its own services in Australia.
"We're a fully listed company that's not state-controlled; we have a 100 per cent independent board and we're legally obliged to act in the interests of all our shareholders," he said. "And the government of New Zealand has not, and will not, guarantee Air New Zealand's debt.
"So we are a pure commercial enterprise and our objective for investing in Virgin is purely commercial, and I think it is bit disingenuous to be positioning us as someone who is deliberately wanting to hurt Qantas."
Qantas recently had its investment grade credit rating with Standard & Poor's downgraded to junk after it revealed it expected to record an interim underlying pre-tax loss of up to $300 million. It has been conducting a lobbying campaign for government assistance, arguing that moves by key Virgin airlines shareholders Air NZ, Etihad Airways and Singapore Airlines to support a $350m entitlement offer has created an unlevel playing field in Australian aviation.
Mr Luxon said Air NZ was not about to stand by and let Qantas weaken Virgin to a point of insolvency so that the bigger airline could have a complete monopoly again.
While he believed Qantas was in "a challenging place", he said the airline remained well-resourced by international airline standards.
He believed Qantas had created a misconception and a disconnect that it was about to go broke when it was an incredibly well-resourced company with massive natural advantages in the Australian marketplace.
"I don't quite understand the narrative in Australia, given it feels like the creation of artificial, orchestrated crisis which ultimately hurts the brand, the share price and undermines confidence from customers and ultimately employees," Mr Luxon said. "The reality is there are quite a lot of levers available to improve any business and Qantas is still free to attract foreign capital if they wish. They are still free to undertake a rights issue as Virgin has done; they are certainly free to improve the basis of their cost levers within their businesses as Air New Zealand has done over a decade."
Mr Luxon said it was up to Qantas chief executive Alan Joyce and his team to work out what they needed to do and he acknowledged that the aviation industry was tough. "We clearly have competition from Jetstar in New Zealand and it's a very good thing," he said. "They are a very good competitor and that competition is very energising and very good for Air New Zealand. And so I think the reverse works in the Australian marketplace as well."
Air NZ boosted its stake in Virgin to 24.5 per cent as a result of the capital raising and has Foreign Investment Review Board permission to lift that to 25.9 per cent.
Mr Luxon said that was a decision for the future and the the airline was at the level it wanted to be in terms of exposure to markets and assets. He reiterated comments earlier in the year that Air NZ did not want to see Virgin privatised and the scrutiny involved in being publicly listed was good for management. Air NZ, Etihad and Singapore will also be invited to join Virgin's board, but Mr Luxon said he had yet to consider whether to take up the seat.
"It probably makes sense now given that we have $400m invested in the business to be able to participate in that board . . . It's a very good board, it's obviously full of Australian independent directors and an Australian independent chairman. We'll work our way through that and Virgin will work its way through that in the next few months I imagine."
Commenting on Australian reports of potential tensions between airline shareholders, Mr Luxon said Air NZ saw the other shareholders as being very constructive and very invested in making sure "Virgin can compete very effectively against a massive monopoly competitor".
He said the relationship with Virgin continued to deepen across the Tasman, although they competed vigorously on other markets such as the Pacific.
Steve Creedy travelled to Auckland courtesy of Air New Zealand.
It appears AJ is making more bad vibes for the Qantas brand than he first may have thought...
SOPS, possibly why AJ has been quiet on media front the last week or so, someone may have told him to zip it, as he has made a bit of a goose of himself since late November.. the above story helps confirm this for me which may well be the case, along with what many on here have already said .. poor AJ
