Air NZ eyes Pacific islands tie-up

AIR NEW ZEALAND will consider extending its trans-Tasman alliance with Virgin Australia to include the Pacific islands when it has to reapply to regulators late this year for a continuation of the existing deal.

Declaring the Kiwi airline in "growth mode" after a solid first-half profit, the new chief executive, Christopher Luxon, said extending the alliance was something the two airlines could consider because they both had "good Pacific island businesses".

"I'm not sure at this stage - that is something we are continuing to discuss," he said.

The two airlines will have to apply for approval in Australia and New Zealand to continue their alliance on trans-Tasman routes by the end of this year.

In 2010, the airlines considered including the Pacific islands in their alliance but decided against it because of regulatory hurdles.

Several routes to the Pacific islands would become monopolies if the airlines were allowed to broaden their alliance in the region.

Mr Luxon said the outlook was positive on the trans-Tasman route, while the airline was "equally excited about opportunities within the broader Pacific rim region", including Asia and the Americas.

The delivery of two more leased wide-body Boeing 777s next year, in addition to the first of its 787-9 Dreamliners, will allow Air New Zealand to consider flying to new destinations within the Asia-Pacific.

Shares in Air Zealand rose 5 per cent after it posted a net profit of $NZ100 million ($81 million) for the six months to December, up from $NZ38 million. It will pay an interim dividend of NZ3¢ a share on March 22, up from NZ2¢ previously.