Wirraway
23rd Oct 2003, 00:53
Thurs "Sydney Morning Herald"
D-Day for Air NZ's alliance with Qantas
By Geoffrey Thomas
October 23, 2003
On the eve of the New Zealand competition watchdog's decision on Air NZ's equity alliance with Qantas, the Auckland-based airline has warned shareholders that this year's profit will only just pip its 2002-03 result.
Air NZ chief executive Ralph Norris, addressing the airline's annual meeting in Auckland yesterday, warned that the company's profitability was volatile, subject to numerous factors outside the airline's control and that dividends were not on the horizon. Mr Norris said that he expected a profit before one-off items and tax for 2003-04 of about $NZ220 million ($189 million).
"All other things being equal, we will deliver a profit slightly above that of the 2003 financial year," Mr Norris said.
Air NZ recorded a net profit of $NZ165.7 million last financial year, against a $NZ319 million loss in 2001-02. The profit was the first in four years, with accumulated losses over that period topping $NZ2.3 billion.
Mr Norris said while the airline had carried about 250,000 more passengers in the September quarter than last year, yields declined 6.5 per cent to NZ11.7c.
He said the airline's financial performance was being assisted by 12 per cent gains by the NZ dollar against the US dollar over the fiscal year as 45 per cent of the airline's costs were denominated in US dollars. "This equates to a gain of around $NZ10-15 million for every 1c increase against the US dollar," Mr Norris said.
The NZ Commerce Commission will announce today its long-awaited final decision on Air NZ $NZ550 million proposed alliance with Qantas.
The deal has already been rejected by the Australian corporate regulator but both airlines have lodged appeals with the Australian Competition Tribunal.
Air NZ shares firmed .5c to 45.5c and Qantas rose 2c to $3.55 yesterday.
The West Australian and agencies
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Thurs "The Dominion Post" NZ
Rejection of airline alliance could cost taxpayer
23 October 2003
Taxpayers might have to stump up with another $150 million if a proposed alliance between Air New Zealand and Qantas is rejected by the Commerce Commission today.
The money was part of a Government 2001 bail-out package which has cost taxpayers $885 million so far.
Most believe the commission will confirm its April draft decision and reject the alliance, which would see Qantas buying a 22.5 per cent stake in Air New Zealand for $550 million.
But there have been glimmers of hope for the alliance since the commission's six-day conference on the issue in August.
Commission acting chairwoman Paula Rebstock said at the end of conference that "things have moved on a little bit, to be honest, since the commission's draft determination".
Virgin Blue has committed to flying limited services on the Tasman, and Dubai-based Emirates Airline has become the third largest competitor between Auckland and the Australian east coast.
An industry source also said last month that the commission had begun work on a surveillance regime to police the alliance and the raft of conditions that could be imposed.
Forsyth Barr head of research Rob Mercer said the commission might view the alliance more favourably, but he doubted it would be enough to give its approval.
Without the alliance, Air New Zealand would have to raise about $200 million through a rights issue to reduce debt and finance the upgrading of its long-haul international fleet.
The Government would be called on to underwrite the capital raising, using the $150 million, Mr Mercer said.
The airlines say that consolidation among the world's airlines is inevitable and that without the alliance they will enter a "war of attrition" that Air New Zealand could not win.
Opponents say a price war is not credible, because it would harm Qantas financially with no certainty that it could recoup the losses longer term in a volatile industry.
Former commissioner Professor Kate Brown said this week that the $693 million gulf between what the two sides calculated to be the public impact of the alliance appeared impossible to bridge and the commission would stick to its guns.
Ms Brown said nothing should be read into the commission's decision to delay its final determination by four weeks - this was usually the result of a heavy workload or the need to get consensus between its economists and lawyers over the wording of a decision.
"They really do try to make sure that if they end in court they are going to win."
If the Commerce Commission turns down the alliance, Air New Zealand can appeal to the High Court.
The airlines are already appealing the Australian competition watchdog's decision last month to reject the alliance, and some observers believe that trying to fight appeals in both countries could be too difficult.
Sydney-based Centre for Asia Pacific Aviation Studies managing director Peter Harbison also expected the alliance would be turned down.
Given that both governments supported the alliance, it would be up to them to develop a comprehensive aviation policy that would allow the airlines to come together without the need for regulatory approval, Mr Harbison said.
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D-Day for Air NZ's alliance with Qantas
By Geoffrey Thomas
October 23, 2003
On the eve of the New Zealand competition watchdog's decision on Air NZ's equity alliance with Qantas, the Auckland-based airline has warned shareholders that this year's profit will only just pip its 2002-03 result.
Air NZ chief executive Ralph Norris, addressing the airline's annual meeting in Auckland yesterday, warned that the company's profitability was volatile, subject to numerous factors outside the airline's control and that dividends were not on the horizon. Mr Norris said that he expected a profit before one-off items and tax for 2003-04 of about $NZ220 million ($189 million).
"All other things being equal, we will deliver a profit slightly above that of the 2003 financial year," Mr Norris said.
Air NZ recorded a net profit of $NZ165.7 million last financial year, against a $NZ319 million loss in 2001-02. The profit was the first in four years, with accumulated losses over that period topping $NZ2.3 billion.
Mr Norris said while the airline had carried about 250,000 more passengers in the September quarter than last year, yields declined 6.5 per cent to NZ11.7c.
He said the airline's financial performance was being assisted by 12 per cent gains by the NZ dollar against the US dollar over the fiscal year as 45 per cent of the airline's costs were denominated in US dollars. "This equates to a gain of around $NZ10-15 million for every 1c increase against the US dollar," Mr Norris said.
The NZ Commerce Commission will announce today its long-awaited final decision on Air NZ $NZ550 million proposed alliance with Qantas.
The deal has already been rejected by the Australian corporate regulator but both airlines have lodged appeals with the Australian Competition Tribunal.
Air NZ shares firmed .5c to 45.5c and Qantas rose 2c to $3.55 yesterday.
The West Australian and agencies
===========================================
Thurs "The Dominion Post" NZ
Rejection of airline alliance could cost taxpayer
23 October 2003
Taxpayers might have to stump up with another $150 million if a proposed alliance between Air New Zealand and Qantas is rejected by the Commerce Commission today.
The money was part of a Government 2001 bail-out package which has cost taxpayers $885 million so far.
Most believe the commission will confirm its April draft decision and reject the alliance, which would see Qantas buying a 22.5 per cent stake in Air New Zealand for $550 million.
But there have been glimmers of hope for the alliance since the commission's six-day conference on the issue in August.
Commission acting chairwoman Paula Rebstock said at the end of conference that "things have moved on a little bit, to be honest, since the commission's draft determination".
Virgin Blue has committed to flying limited services on the Tasman, and Dubai-based Emirates Airline has become the third largest competitor between Auckland and the Australian east coast.
An industry source also said last month that the commission had begun work on a surveillance regime to police the alliance and the raft of conditions that could be imposed.
Forsyth Barr head of research Rob Mercer said the commission might view the alliance more favourably, but he doubted it would be enough to give its approval.
Without the alliance, Air New Zealand would have to raise about $200 million through a rights issue to reduce debt and finance the upgrading of its long-haul international fleet.
The Government would be called on to underwrite the capital raising, using the $150 million, Mr Mercer said.
The airlines say that consolidation among the world's airlines is inevitable and that without the alliance they will enter a "war of attrition" that Air New Zealand could not win.
Opponents say a price war is not credible, because it would harm Qantas financially with no certainty that it could recoup the losses longer term in a volatile industry.
Former commissioner Professor Kate Brown said this week that the $693 million gulf between what the two sides calculated to be the public impact of the alliance appeared impossible to bridge and the commission would stick to its guns.
Ms Brown said nothing should be read into the commission's decision to delay its final determination by four weeks - this was usually the result of a heavy workload or the need to get consensus between its economists and lawyers over the wording of a decision.
"They really do try to make sure that if they end in court they are going to win."
If the Commerce Commission turns down the alliance, Air New Zealand can appeal to the High Court.
The airlines are already appealing the Australian competition watchdog's decision last month to reject the alliance, and some observers believe that trying to fight appeals in both countries could be too difficult.
Sydney-based Centre for Asia Pacific Aviation Studies managing director Peter Harbison also expected the alliance would be turned down.
Given that both governments supported the alliance, it would be up to them to develop a comprehensive aviation policy that would allow the airlines to come together without the need for regulatory approval, Mr Harbison said.
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