Air NZ eyes Pacific islands tie-up
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.
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Air New Zealand is considering extending its existing trans‑Tasman alliance with Virgin Australia to include Pacific islands when the two airlines reapply to regulators late this year. The idea is under discussion because both carriers have “good Pacific island businesses,” though no decision has been made yet.
The two airlines must apply for approval in Australia and New Zealand to continue their trans‑Tasman alliance by the end of this year, according to the article.
In 2010 the airlines considered adding Pacific islands to their alliance but decided against it because of regulatory hurdles. Regulators were concerned several routes to Pacific islands would become monopolies if the alliance was broadened.
Air New Zealand reported a net profit of NZ$100 million for the six months to December, up from NZ$38 million previously. After the result was announced, shares in the airline rose about 5% and the company declared an interim dividend of NZ3¢ a share payable on March 22, up from NZ2¢.
Air New Zealand expects delivery of two leased wide‑body Boeing 777s next year and the first of its Boeing 787‑9 Dreamliners. The additional wide‑body aircraft will allow the airline to consider flying to new destinations within the Asia‑Pacific region.
CEO Christopher Luxon described the airline as being in “growth mode,” said the outlook on the trans‑Tasman route was positive, and said the airline was “equally excited about opportunities within the broader Pacific rim region,” including Asia and the Americas.
Investors should note the article’s point that regulators could block an extension because several Pacific island routes might become monopolies. Any bid to broaden the alliance would therefore require careful regulatory approval in Australia and New Zealand.
Based on the article, everyday investors should watch for the airlines’ reapplication to regulators late this year about the trans‑Tasman alliance, any announcements about including Pacific islands, the timing of Boeing 777 and 787‑9 deliveries next year, and future profit and dividend updates from Air New Zealand.
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