View Full Version : Qantas, Air NZ haggling over $500m alliance

23rd Oct 2002, 18:46
Thurs "Sydney Morning Herald" 24/10/02

Qantas, Air NZ haggling over $500m alliance
By Mark Todd
October 24 2002

Investors may have to wait another week at least for Qantas and Air New Zealand to announce their long-awaited $500 million alliance, with no news expected from the Kiwi carrier's annual meeting on Tuesday.

Air New Zealand's chief executive Ralph Norris is expected to give an update on the progress of the talks and again comment on the merit of a deal given the uncertainty in global aviation markets. But, he's unlikely to announce a final deal unless there is a last-minute breakthrough. It is thought that the two carriers remained locked in talks about the value to ascribe to Air New Zealand shares as part of any deal.

Salomon Smith Barney has previously estimated that Qantas could spend about $450 million to $520 million buying up to a 25 per cent of Air New Zealand.

More minor issues may include the airlines' membership of global alliances, commitments on feeding traffic into New Zealand, and how to divvy up savings arising from any partnership. There was speculation yesterday that Air New Zealand might have to divest its discount trans-Tasman carrier Freedom to Virgin Blue as a condition of the deal, to preserve competition on the route.

SSB believes Qantas and Air New Zealand stand to share in potential revenue and synergy benefits worth $NZ360 million ($315 million) in the third year of an alliance by co-operating in areas such maintenance and scheduling of services.

Last week Qantas chairman Margaret Jackson said "constructive" discussions continued. The deal, once approved by the Air New Zealand board, would go before the Australian Competition & Consumer Commission and the New Zealand Commerce Commission.

Sources suggested that while Qantas and Air New Zealand were in agreement on many issues, it was still uncertain that they would strike a partnership. That's contrary to a recent shift in sentiment to the opinion that it's not a matter of if they'll proceed with an alliance, but more a question of when.

Some analysts have estimated Qantas may need to inject another $NZ100 million in capital into Air New Zealand.

Qantas shares were up 3c to $3.79. Air New Zealand eased 1c to 44.5c.

23rd Oct 2002, 23:03
It sounds like one of those deals from a tricky second hand car salesman.........."have I got a deal for you on this little beauty!!!!" .
SIA having been there must be laughing at seeing QF getting sucked in!:D

Buster Hyman
24th Oct 2002, 11:21
I guess the ANZ board now how to avoid being $crewed by an equity partner, due to their previous boards' experience in this field!