Air NZ to lose Freedom for staying with Qantas
 

Fri "Melbourne Age" 4/4/03

Air NZ to lose Freedom for staying with Qantas
April 4 2003
By Geoffrey Thomas
Perth

Air New Zealand will be forced sell its low-cost subsidiary Freedom Air and make available check-in facilities at Auckland Airport to Virgin Blue to gain regulatory approval for its proposed equity tie-up with Qantas, industry sources claim.

These are two of the concessions expected to be outlined when the NZ Commerce Commission and the Australian Consumer and Competition Commission release draft determinations on April 10.

Last November Qantas and Air New Zealand struck a $NZ550 million ($A505 million) deal for Qantas to take 22.5 per cent of the New Zealand airline.

The NZ Government, which encouraged the deal, gave its tick in December triggering the first (4.99 per cent) of three purchases of new shares in the form of redeemable convertible notes.

However, the deal was seen by regulators to largely eliminate competition between Australia and New Zealand.

Virgin Blue, which had previously hinted its intention to fly between the two countries, said it would not operate services if the merger went ahead.

However, the airline has modified its position to a demand that Air New Zealand divest itself of Freedom Air, which operates from regional centres in New Zealand to Australian cities on the east coast.

Competition regulators are also expected to accede to Virgin Blue's request that Air New Zealand not be permitted to start another low-fare airline for three years, and must give up some check-in counters at Auckland Airport.

JBWere airline analyst Peter Sigley says that the deal will go-ahead. "There is the political and economic will to make this happen," he said.

Qantas and Air New Zealand have pleaded that while their equity alliance does eliminate competition on some routes, it will bring combined economic benefits to Australia and New Zealand over five years of $1.57 billion.

Qantas shares lifted 8¢ yesterday to $3.15.

- West Australian
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Pic: Freedom Air 737-300 ZK-SJE on final to rwy 01 BNE

http://www.jetphotos.net/viewphoto.php?id=1710

Photo: Wirraway
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So does this mean VB will buy Freedom Air, and what does that mean for Freedom Air drivers?

Liked the bit about Freedom operating from regional centres - what like AKL, WLG and CHC?

Maybe they can sell Freedom Air to Qantas!;)

......... or Australian Airlines! :D

...........That's the spirit. :D :D

Any idea how much Freedom Air would be worth??

......why, do you want to buy it.

Considering the fate of other el cheapo trans Tasman operators, not much Guptar.

Apparently the main reason that Virgin Blue wants Freedom out of the QF/NZ fold is because Freedom has a lower cost base than they do.

Any idea how Jetconnect's operating costs compare to Freedom's? I'm sure they'll give Virgin a run for their money.

Why would VB buy Freedom? VB can do anything it does in a heartbeat. Better organisation, better brand, political clout etc etc etc.. branson does not buy other people's businesses. He always starts up his own. If I worked for Freedom I think I would be looking for another job as it will disappear if the deal goes through.

Interesting one this, AirNZ will only let Freedom go as a last resort. This begs the question how? Sell it to VB or to someone else? Well VB wouldn't want anyone else getting there hands on it as it would still be operating in direct competion and does have a lower cost base.

So VB buy it or try to force AirNZ to close it down, AirNZ will plead, investment loss, job loses,etc and the NZ govt wont like that so I think that VB may have no option but to buy it if they want Freedom out of the alliances hands. What they do with it is another topic!!

SJ op cost
 

SJ op cost = 6.4 cents per K.

DJ can't beat that which is why they want to powerbroke a recast duopoly.

How funny it would be if Ralph's 'strawman' alliance should have its bluff called.