Air NZ picked to announce Qantas deal on Monday
I don't understand why so many K1W1's are aginst selling 25% of Air NZ to QF because with the lower labor costs in NZ it's obvious that Geoff Dixon will send a lot of the labour intensive jobs across the pond to NZ to the detriment of a lot of Australians. They must be blind and stupid to not want the sale to go ahead!!!!!
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The main concern that has been kicked up in the NZ media over this has been about fares increasing.
No-one seems to remember that Qantas previously held about 20% of Air NZ a while ago.
I can see some engineering stuff being sent across the Tasman.
No-one seems to remember that Qantas previously held about 20% of Air NZ a while ago.
I can see some engineering stuff being sent across the Tasman.
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Pascoe: Qantas and Air NZ ... time to get domestic
25 November 2002 9:00:00 AM
After a long courtship, it looks like Qantas and Air New Zealand are about to have another go at living together, but the relationship is not without problems.
For a start, it's the second time round for this couple — the first attempt ended badly with Qantas walking out in 1997 after being taken for granted by its Kiwi spouse. That was when Air New Zealand management had attitude — before it totally embarrassed itself and bankrupted the airline, requiring a bail-out by the New Zealand government.
Qantas felt Air New Zealand never listened to it the first time — it won't be getting back into bed unless it has a large say in how the household spends the money and where it goes on Saturday nights for fun. In short, Qantas will want something close to a 50 percent say for its 22.5 to 25 percent stake.
Presuming that the pair have satisfied themselves on that front, there's then a little matter of Kiwi national pride and the chup on the shoulder about Big Brother Australia. Politically, most nations link national pride and their flag carrier — something that can lead to irrational investment decisions.
What carrots the airlines might have to get over the Kiwi politics will be interesting. One NZ newspaper is suggesting Qantas will move some of its engineering work to NZ, thus saving some money on cheaper Kiwi workers and creating a few jobs on that side of the Tasman. But you can imagine how well that will go down with the local unions?
But moving along, if all the Kiwi angles are covered, there's still Allan Fels' ACCC to keep happy. Virgin Blue is already agitating about the Qantas/BA joint services agreement on the kangaroo route, saying it will oppose its renewal when it expires early next year.
Virgin Blue is being quoted this morning as saying it will review its plans to fly across the Tasman if the Qantas/Air New Zealand deal goes ahead, but I suspect New Zealand wasn't high on its list of targets anyway.
In any event, Qantas is unlikely to get anything like the BA joint services agreement ticked by the ACCC.
And then there are the "relos" — this would be a mixed defactoship, as Qantas is a One World member while Air New Zealand is a Star Alliance airline.
The Kiwi press is suggesting Singapore Airlines might buy BA's 17 percent stake in Qantas and the flying kangaroo would then move into the Star Alliance family and live happily ever after — but that sounds like more hope that the Kiwi tail might wag the Australian dog.
Indeed, it might be easier to keep the ACCC happy if the two airlines remained in different alliances, but that in turn would require a lack of pillow talk.
Thus it's easy to see why it's taken so long for these two to get to any sort of announcement stage — and it might yet prove to be less than easy to live together
25 November 2002 9:00:00 AM
After a long courtship, it looks like Qantas and Air New Zealand are about to have another go at living together, but the relationship is not without problems.
For a start, it's the second time round for this couple — the first attempt ended badly with Qantas walking out in 1997 after being taken for granted by its Kiwi spouse. That was when Air New Zealand management had attitude — before it totally embarrassed itself and bankrupted the airline, requiring a bail-out by the New Zealand government.
Qantas felt Air New Zealand never listened to it the first time — it won't be getting back into bed unless it has a large say in how the household spends the money and where it goes on Saturday nights for fun. In short, Qantas will want something close to a 50 percent say for its 22.5 to 25 percent stake.
Presuming that the pair have satisfied themselves on that front, there's then a little matter of Kiwi national pride and the chup on the shoulder about Big Brother Australia. Politically, most nations link national pride and their flag carrier — something that can lead to irrational investment decisions.
What carrots the airlines might have to get over the Kiwi politics will be interesting. One NZ newspaper is suggesting Qantas will move some of its engineering work to NZ, thus saving some money on cheaper Kiwi workers and creating a few jobs on that side of the Tasman. But you can imagine how well that will go down with the local unions?
But moving along, if all the Kiwi angles are covered, there's still Allan Fels' ACCC to keep happy. Virgin Blue is already agitating about the Qantas/BA joint services agreement on the kangaroo route, saying it will oppose its renewal when it expires early next year.
Virgin Blue is being quoted this morning as saying it will review its plans to fly across the Tasman if the Qantas/Air New Zealand deal goes ahead, but I suspect New Zealand wasn't high on its list of targets anyway.
In any event, Qantas is unlikely to get anything like the BA joint services agreement ticked by the ACCC.
And then there are the "relos" — this would be a mixed defactoship, as Qantas is a One World member while Air New Zealand is a Star Alliance airline.
The Kiwi press is suggesting Singapore Airlines might buy BA's 17 percent stake in Qantas and the flying kangaroo would then move into the Star Alliance family and live happily ever after — but that sounds like more hope that the Kiwi tail might wag the Australian dog.
Indeed, it might be easier to keep the ACCC happy if the two airlines remained in different alliances, but that in turn would require a lack of pillow talk.
Thus it's easy to see why it's taken so long for these two to get to any sort of announcement stage — and it might yet prove to be less than easy to live together
Qantas Jetconnect??
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It must be the weekend hangover but A$500 million for less than a quarter of Air NZ?!?!?!. 
That seems to be far, far too much money for a company with old jets, a board that has a chip on it's shoulder and a balance sheet just in the black.
Also; Isn't the socialist NZ government still a majority shareholder?.
Where do you think their alliance will be if there is any 're-structuring'. The NZ worker or the NZ taxpayer?.
Can someone smarter than me post; - where QF are winning in this deal.
That seems to be far, far too much money for a company with old jets, a board that has a chip on it's shoulder and a balance sheet just in the black.
Also; Isn't the socialist NZ government still a majority shareholder?.
Where do you think their alliance will be if there is any 're-structuring'. The NZ worker or the NZ taxpayer?.
Can someone smarter than me post; - where QF are winning in this deal.
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RFG,
Hell!!! It is much worse than I thought!!!
You are quite right. AirNz is not worth that much. $550 million AUD for 22.5% is ridiculous for that outfit. As mentioned in another post the Aussie Taxpayer will be called upon to clear up the resulting mess if QF( don't forget Qf is the National flag carrier) keeps splashing money around like that.
There is a saying that if you buy something from a kiwi you have paid too much and if you sell to one you got too little!
Hell!!! It is much worse than I thought!!!
You are quite right. AirNz is not worth that much. $550 million AUD for 22.5% is ridiculous for that outfit. As mentioned in another post the Aussie Taxpayer will be called upon to clear up the resulting mess if QF( don't forget Qf is the National flag carrier) keeps splashing money around like that.
There is a saying that if you buy something from a kiwi you have paid too much and if you sell to one you got too little!
Last edited by Flat Side Up; 25th Nov 2002 at 02:26.
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To quote a big, buck-toothed, hairy New Zealand beauty contest winner, they " bought a lemon". I think QF will rue the day that they got associated with that despicable mob over there. Now that QF own AirNZ, perhaps the NZ pilots will be happy to agree to the conditions that they wanted to impose on the Ansett pilots.
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Midas Touch or The King has no clothes;
Is it not possible that the QF board are being overconfident?
QF have had a dream run and a lot of luck the last couple of years.
No doubt QF will stay profitable but It's hard to imagine that QF will repeat the same profit results in the future with an expanding Virgin Blue (& Virgin Pacific?) and recovering international competition.
Uncle Geoff may regret buying 22.5% of a Lemon when his share options come up.
QF have had a dream run and a lot of luck the last couple of years.
No doubt QF will stay profitable but It's hard to imagine that QF will repeat the same profit results in the future with an expanding Virgin Blue (& Virgin Pacific?) and recovering international competition.
Uncle Geoff may regret buying 22.5% of a Lemon when his share options come up.
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I'm still trying to see where you guys get the view Air NZ is a lemon.
It nearly went under due to poor decisions after buying Ansett and being unable to sustain the losses from Ansett or spend enough to make it profitable, and was then bailed out by the Govt. However the core airline appears to have always made money even thru the Ansett period and is still making money today.
Just because everyone, quite rightly, has the sh*ts with the previous Air NZ board (especially Selwyn Cushing) does not mean that the business isn't profitable going forward.
It nearly went under due to poor decisions after buying Ansett and being unable to sustain the losses from Ansett or spend enough to make it profitable, and was then bailed out by the Govt. However the core airline appears to have always made money even thru the Ansett period and is still making money today.
Just because everyone, quite rightly, has the sh*ts with the previous Air NZ board (especially Selwyn Cushing) does not mean that the business isn't profitable going forward.
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ABC News Online
Mon, Nov 25 2002 8:11 PM AEDT
Qantas-Air New Zealand deal under increased scrutiny
The proposed alliance between Air New Zealand and Qantas is coming under increasing scrutiny.
The Australian Competition and Consumer Commission (ACCC) says it will closely scrutinise the deal, while unions are worried about jobs and rival Virgin Blue says there is no benefit for travellers.
Both airlines say it will allow them to better compete in a tough aviation market.
But Virgin Blue's chief executive Brett Godfrey says it is anti-competitive and if it proceeds Virgin will postpone its plans to service New Zealand.
"New Zealand was very much in our forethoughts in terms of what we wanted to do but we also made it pretty clear we would not walk into a monopoly, he said.
"The Australian law says that if this lessons competition significantly or is not in the public interest, then it should not be allowed to go ahead.
"Now if it is deemed to be anti-competitive, then the next test is, it in fact in the public interest to let this go ahead.
"The only public interest served by this is the share holders. its definitely not in terms of the people who will be paying the tickets."
But Qantas chief executive Geoff Dixon says the alliance will be good for shareholders and customers.
"Just because you have, as someone said, a virtual monopoly does not mean that customers cannot benefit," he said.
Under the deal announced this morning, Qantas is to take a 22.5 per cent stake in Air New Zealand.
Air New Zealand was rescued from bankruptcy just over a year ago by the New Zealand Government, which was left holding more than 80 per cent of the airline.
Qantas says the new partnership will help both airlines retain their independence in an industry facing considerable and continuing difficulties and boost visitor numbers to each country by tens of thousands each year.
Qantas chief executive Geoff Dixon says the proposal will strengthen both airlines in a very tough global aviation market.
"Unless we are proactive and indeed creative in dealing with these pressures, both airlines I believe run the risk of being marginalised over time," he said.
While the chairman of Air New Zealand John Palmer has been quick to deny suggestions his airline is selling out.
"Both parties have given something and in return have gained many advantages that would simply not have been possible without such a strategic alliance."
The Federal Government says it has been assured no jobs will be lost to Australia if the deal goes ahead.
But Transport Minsiter John Anderson says the deal will have to demonstrate significant public benefit and not preclude other airlines from operating on the same routes before it is approved by the competition watchdog.
Mr Anderson says the Government supports any move that strengthens the aviation industry in the region.
Reservations
But the ACCC has reservations about the proposed alliance.
ACCC chairman Alan Fels has indicated he is not convinced the deal is a good thing.
"I think the parties, because the deal on the face of it reduces competition, will have to argue that there's substantial public benefit."
Virgin Blue is urging the ACCC to block the deal.
Meanwhile, the Australian Manufacturing Workers' Union is calling on Qantas to give an ironclad guarantee that jobs will be safe under the merger.
National Secretary Doug Cameron says he wants more than a verbal assurance about Australian jobs.
"We have had a terrible experience with Air New Zealand and Ansett," he said.
"We come very jaundiced to this merger after what Air New Zealand did with Ansett."
Ahead of the announcement, the commercial head at rival airline Virgin Blue, David Huttner, said his airline would be taking the issue up again with the Australian Competition and Consumer Commission (ACCC).
"We certainly don't see any consumer competition benefit by allowing such a deal to go ahead and we will be addressing it with the ACCC and their counterparts with New Zealand," Mr Huttner said.
The New Zealand market has been one of the possibilities considered by Virgin Blue.
"Because clearly the deal has no interest for the public - it's simply a good deal for the finance authorities in New Zealand, who bought into an airline that was nearly bankrupt and now is quite healthy," Mr Huttner said.
"And if they're healthy, why do they need to do the deal?"
Mon, Nov 25 2002 8:11 PM AEDT
Qantas-Air New Zealand deal under increased scrutiny
The proposed alliance between Air New Zealand and Qantas is coming under increasing scrutiny.
The Australian Competition and Consumer Commission (ACCC) says it will closely scrutinise the deal, while unions are worried about jobs and rival Virgin Blue says there is no benefit for travellers.
Both airlines say it will allow them to better compete in a tough aviation market.
But Virgin Blue's chief executive Brett Godfrey says it is anti-competitive and if it proceeds Virgin will postpone its plans to service New Zealand.
"New Zealand was very much in our forethoughts in terms of what we wanted to do but we also made it pretty clear we would not walk into a monopoly, he said.
"The Australian law says that if this lessons competition significantly or is not in the public interest, then it should not be allowed to go ahead.
"Now if it is deemed to be anti-competitive, then the next test is, it in fact in the public interest to let this go ahead.
"The only public interest served by this is the share holders. its definitely not in terms of the people who will be paying the tickets."
But Qantas chief executive Geoff Dixon says the alliance will be good for shareholders and customers.
"Just because you have, as someone said, a virtual monopoly does not mean that customers cannot benefit," he said.
Under the deal announced this morning, Qantas is to take a 22.5 per cent stake in Air New Zealand.
Air New Zealand was rescued from bankruptcy just over a year ago by the New Zealand Government, which was left holding more than 80 per cent of the airline.
Qantas says the new partnership will help both airlines retain their independence in an industry facing considerable and continuing difficulties and boost visitor numbers to each country by tens of thousands each year.
Qantas chief executive Geoff Dixon says the proposal will strengthen both airlines in a very tough global aviation market.
"Unless we are proactive and indeed creative in dealing with these pressures, both airlines I believe run the risk of being marginalised over time," he said.
While the chairman of Air New Zealand John Palmer has been quick to deny suggestions his airline is selling out.
"Both parties have given something and in return have gained many advantages that would simply not have been possible without such a strategic alliance."
The Federal Government says it has been assured no jobs will be lost to Australia if the deal goes ahead.
But Transport Minsiter John Anderson says the deal will have to demonstrate significant public benefit and not preclude other airlines from operating on the same routes before it is approved by the competition watchdog.
Mr Anderson says the Government supports any move that strengthens the aviation industry in the region.
Reservations
But the ACCC has reservations about the proposed alliance.
ACCC chairman Alan Fels has indicated he is not convinced the deal is a good thing.
"I think the parties, because the deal on the face of it reduces competition, will have to argue that there's substantial public benefit."
Virgin Blue is urging the ACCC to block the deal.
Meanwhile, the Australian Manufacturing Workers' Union is calling on Qantas to give an ironclad guarantee that jobs will be safe under the merger.
National Secretary Doug Cameron says he wants more than a verbal assurance about Australian jobs.
"We have had a terrible experience with Air New Zealand and Ansett," he said.
"We come very jaundiced to this merger after what Air New Zealand did with Ansett."
Ahead of the announcement, the commercial head at rival airline Virgin Blue, David Huttner, said his airline would be taking the issue up again with the Australian Competition and Consumer Commission (ACCC).
"We certainly don't see any consumer competition benefit by allowing such a deal to go ahead and we will be addressing it with the ACCC and their counterparts with New Zealand," Mr Huttner said.
The New Zealand market has been one of the possibilities considered by Virgin Blue.
"Because clearly the deal has no interest for the public - it's simply a good deal for the finance authorities in New Zealand, who bought into an airline that was nearly bankrupt and now is quite healthy," Mr Huttner said.
"And if they're healthy, why do they need to do the deal?"
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I just hope that the Air Garbage cancer does not descend on QF...but then VirginSpiv are now mouthing off about what may not be fair.....to whom may I ask...............QF and VirginSpiv are becoming of the same ilk...may they live in interesting times...................................
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"This is effectively going to be one airline. Qantas wants to turn Air New Zealand into a regional branch office. They're not paying out $500 million to sit at the board table and take morning tea. They're coming in to run the place."
Tues "The Australian" 26/11/02
Qantas and Air NZ to join
By Steve Creedy, Andrew Fraser
and Luke McIlveen
November 26, 2002
BUDGET carrier Virgin Blue says it will walk away from the New Zealand market if the planned $NZ550 million ($491 million) alliance between Qantas and Air New Zealand is allowed to proceed.
Qantas has agreed to buy a 22.5 per cent stake in Air New Zealand and form a joint operation across the Tasman and in New Zealand managed by the Kiwi carrier.
The airlines would codeshare on flights to the US and within Australia as part of a five-year agreement that is expected to produce savings of up to $NZ450 million.
The combined group would represent about 4 per cent of global airline capacity, with Qantas flying 197 aircraft to 32 countries and Air New Zealand operating 83 planes to 15 countries.
In New Zealand, the deal has sparked a backlash from parliamentarians, business leaders and travel agents but Prime Minister Helen Clark is expected to push the deal through with a cabinet vote.
Even Miss Clark's coalition partners in the United Future party are upset over the deal.
United Future leader Peter Dunne said Qantas had spent the past 60 years trying to "marginalise and dominate" Air New Zealand. "This is the achievement of Qantas's 60-year campaign to gut its New Zealand rival."
Opposition leader Bill English called the plan "Australia's biggest win over New Zealand", warning domestic and trans-Tasman airfares would rise, hurting tourism and export business.
"This is effectively going to be one airline. Qantas wants to turn Air New Zealand into a regional branch office. They're not paying out $500 million to sit at the board table and take morning tea. They're coming in to run the place."
Virgin chief executive Brett Godfrey called on the Australian Competition and Consumer Commission to block the deal.
The commission is concerned the Qantas-Air New Zealand alliance would tie up 63 per cent of flights to the US from the South Pacific and dominate the Tasman and New Zealand. The nearest rival, United Airlines, holds a 23 per cent share of the market.
ACCC chairman Allan Fels said: "The proposal immediately raises concerns for the ACCC.
"Today's announcement appears to include strong elements of anti-competitive arrangements including price-fixing and route-sharing."
Transport Minister John Anderson said yesterday he supported any move to strengthen the aviation industry. But he said the proposal would need to demonstrate significant public benefit and not lead to anti-competitive behaviour or stop other airlines from operating on the same routes.
The ACCC will not reach a decision on the proposal for at least six months.
Qantas and Air New Zealand say the deal has strategic benefits to both airlines.
Qantas chief executive Geoff Dixon said he expected the deal to result in job growth in Australia and said it would not raise prices. He said Qantas would "get on with our life" if the alliance were rejected.
"But we don't think it should be," he said. "If people want a strong trans-Tasman and regional airline grouping, I think they'd be very well advised to have a good look at this because the industry's changing dramatically around the world."
Labor's transport spokesman, Martin Ferguson, said Qantas and Air New Zealand had to guarantee the alliance would not result in a loss of jobs or passenger services.
The New Zealand Government has said it would not interfere with an investigation by the New Zealand Commerce Commission.
Tues "The Australian" 26/11/02
Qantas and Air NZ to join
By Steve Creedy, Andrew Fraser
and Luke McIlveen
November 26, 2002
BUDGET carrier Virgin Blue says it will walk away from the New Zealand market if the planned $NZ550 million ($491 million) alliance between Qantas and Air New Zealand is allowed to proceed.
Qantas has agreed to buy a 22.5 per cent stake in Air New Zealand and form a joint operation across the Tasman and in New Zealand managed by the Kiwi carrier.
The airlines would codeshare on flights to the US and within Australia as part of a five-year agreement that is expected to produce savings of up to $NZ450 million.
The combined group would represent about 4 per cent of global airline capacity, with Qantas flying 197 aircraft to 32 countries and Air New Zealand operating 83 planes to 15 countries.
In New Zealand, the deal has sparked a backlash from parliamentarians, business leaders and travel agents but Prime Minister Helen Clark is expected to push the deal through with a cabinet vote.
Even Miss Clark's coalition partners in the United Future party are upset over the deal.
United Future leader Peter Dunne said Qantas had spent the past 60 years trying to "marginalise and dominate" Air New Zealand. "This is the achievement of Qantas's 60-year campaign to gut its New Zealand rival."
Opposition leader Bill English called the plan "Australia's biggest win over New Zealand", warning domestic and trans-Tasman airfares would rise, hurting tourism and export business.
"This is effectively going to be one airline. Qantas wants to turn Air New Zealand into a regional branch office. They're not paying out $500 million to sit at the board table and take morning tea. They're coming in to run the place."
Virgin chief executive Brett Godfrey called on the Australian Competition and Consumer Commission to block the deal.
The commission is concerned the Qantas-Air New Zealand alliance would tie up 63 per cent of flights to the US from the South Pacific and dominate the Tasman and New Zealand. The nearest rival, United Airlines, holds a 23 per cent share of the market.
ACCC chairman Allan Fels said: "The proposal immediately raises concerns for the ACCC.
"Today's announcement appears to include strong elements of anti-competitive arrangements including price-fixing and route-sharing."
Transport Minister John Anderson said yesterday he supported any move to strengthen the aviation industry. But he said the proposal would need to demonstrate significant public benefit and not lead to anti-competitive behaviour or stop other airlines from operating on the same routes.
The ACCC will not reach a decision on the proposal for at least six months.
Qantas and Air New Zealand say the deal has strategic benefits to both airlines.
Qantas chief executive Geoff Dixon said he expected the deal to result in job growth in Australia and said it would not raise prices. He said Qantas would "get on with our life" if the alliance were rejected.
"But we don't think it should be," he said. "If people want a strong trans-Tasman and regional airline grouping, I think they'd be very well advised to have a good look at this because the industry's changing dramatically around the world."
Labor's transport spokesman, Martin Ferguson, said Qantas and Air New Zealand had to guarantee the alliance would not result in a loss of jobs or passenger services.
The New Zealand Government has said it would not interfere with an investigation by the New Zealand Commerce Commission.
Last edited by Wirraway; 25th Nov 2002 at 17:38.
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ACCC to take six months......
What happens in the mean time?.
Is the deal in limbo until the respective consumer commissions can scrutinise the deal?.
I can't imagine QF & AIR NZ consumating the marriage and then being told to change six months later.
Is the deal in limbo until the respective consumer commissions can scrutinise the deal?.
I can't imagine QF & AIR NZ consumating the marriage and then being told to change six months later.
