Asia Pulse
Friday April 11, 2:19 PM AEST
Virgin Blue Would Allow Air NZ, QANTAS Tie-up With Conditions
SYDNEY, April 11 Asia Pulse - Virgin Blue boss Brett Godfrey said he would no longer oppose Qantas Airways Ltd's proposed Air New Zealand stitch-up if two conditions were added to the deal.
Mr Godfrey said access to key NZ airports for Virgin Blue and the removal of Air NZ's cut-price operator Freedom Air would substantially reduce anti-competitive aspects of the scheme.
"It would be difficult for us, if we got those two things resolved, to honestly resubmit to the ACCC (Australian Competition and Consumer Commission) saying it should still be rejected," Mr Godfrey told AAP.
Both the ACCC and the New Zealand Commerce Commission today said they planned to reject the Qantas-Air NZ deal, which involved Qantas buying 22.5 per cent of Air NZ and the two carriers forming a code-share arrangement.
Mr Godfrey said the proposal was "extremely anticompetitive and therefore no one in the industry is really surprised about today's announcement".
"Without them (Qantas and Air NZ) offering them anything other than a paragraph ... as to what they were prepared to do, of course it should have been rejected," he said.
But he said the sale of Freedom Air, possibly to Virgin Blue, and unhindered access to key NZ airports for Virgin Blue, would dramatically improve the competitive landscape.
"Our anti-competition concerns are alleviated to a huge degree by any carrier, be it us or anyone else, given fair access at times that suit the airline schedule - not Qantas' and Air NZ's schedule - to at least the key airports in NZ," he said.
"If that's (Freedom Air) pulled out or sold to us - we'd be an interested bidder - that would alleviate the vast majority of our concerns."
He said Virgin Blue would be interested "with a fair degree of substance" in competing in the NZ market if it was offered Freedom Air for sale.
"We've got about 25 per cent of the Australian domestic market, there is no reason why we couldn't fairly quickly go to 25 per cent of the NZ market and the Tasman with the equipment that we've got coming on over the next two or three years," he said.
"If it is blocked, or else it goes through but with the concessions and undertakings that we've sought, then we will be a very much more substantive player."
Mr Godfrey confirmed Virgin Blue Airlines Pty Ltd, half owned each by logistics group Patrick Corp Ltd and Sir Richard Branson's Virgin group, was on standby for a float originally tipped for early 2003 but shelved because of unstable equity markets.
"We will be ready when our board has confirmed a date, and assuming they choose a date - at this stage I've not been given a date," he said.
"The economic climate's got to be right because if it's not they're (Patrick and Virgin) not going to get the best value for their investment."
ASIA PULSE
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AAP
Mr Godfrey said a Virgin Blue delegation would shortly head to Washington to negotiate with the United States government's Export-Import Bank, seeking to have it underwrite 85 per cent of the value of 10 new aircraft.
While banks would need to be found in order to finance the operation, the remaining 15 per cent - or about $100 million - could be funded through existing cash flow, he said.
Mr Godfrey said access to key New Zealand airports for Virgin Blue and the removal of Air NZ's cut-price operator Freedom Air would substantially increase its chances of entering the NZ market.
"We've got 10 aeroplanes coming on - we've earmarked six of those for international destinations," he said.
"I'd like some of those to go into NZ. If it was arranged in such a way that we could get fair access, perhaps more of those six would find their way to NZ.
"We're not far from at least announcing our first international route and I'm comfortable it will be in before Christmas."
Mr Godfrey reconfirmed earlier predictions Virgin Blue would record a pre tax profit of $100 million to March 31.
AAP
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