View Full Version : Air NZ to fly solo

14th Feb 2003, 06:37
Pic: Air NZ 747-400 ZK-SUH departing BNE rwy 01.
Photo by Wirraway (Ian Sharp)

Fri "The Australian"

Air NZ to fly solo
By Steve Creedy
February 14, 2003

AIR New Zealand has vowed to carry on as a separate entity with the ability to walk away from its proposed alliance with Qantas if the deal does not work.

Air NZ chief executive Ralph Norris told Radio New Zealand yesterday the proposed deal to allow Qantas to buy a 22.5 per cent stake in Air NZ would ensure the airline's autonomy.

"It's very important that the company remains a separate entity, that it doesn't integrate too many of its processes, so if there is a situation where the alliance doesn't work over time, then Air New Zealand can extricate itself and still have the ability to support itself across a range of activities," he said.

Mr Norris was commenting after New Zealand government ministers on Wednesday released Treasury advice highlighting the Kiwi carrier's ability to operate autonomously as the most important concern when considering the deal.

The Government is seeking assurances that Air NZ will be able to pull out of the deal "at minimal cost" should the alliance fall apart. But the New Zealand Government has given the deal its qualified approval.

A joint statement from finance minister Michael Cullen, associate finance minister Trevor Mallard and transport minister Paul Swain said the Government was satisfied that the alliance would deliver substantial benefits to Air NZ and that it met national interest criteria.

The statement said that competition issues were best assessed by the New Zealand Commerce Commission and it had been told that the best way to avoid compromising Air NZ's ability to operate autonomously was "to protect the company's ability to quit the alliance at minimal cost.

"The Government has done this via a letter sent to the New Zealand board requesting that it ensure that direct and indirect costs to Air NZ from any future termination of the alliance are minimised and that, in the event of termination, Air New Zealand will be able to operate independently of Qantas within a reasonable period," it said.

The Treasury advice said risks to Air NZ's ability to leave the deal included shared investments and the competitive environment at the time, including the possibility of low-cost airlines entering the market.

It concluded that the risks of effective control passing to Qantas, a misalignment of interests and exit costs were material "but potentially manageable within the framework of the proposal".

A ceiling on Qantas operations within the alliance of 20 to 30 per cent of the total joint operating agreement would reduce the bigger carrier's ability to grow within the JOA without Air NZ growing also.

The Australian