Air NZ to mull over broader Virgin alliance
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 later 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 to cover the Pacific Islands 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 did consider including the Pacific Islands in their alliance but later decided against it because the regulatory hurdles appeared too high.
A number of routes to the Pacific Islands would become monopolies if the two 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.
Despite the woes besetting the Dreamliner program, Mr Luxon said he was confident Boeing would be able to resolve the problems and begin delivering the first of the airline’s eight planes on order from mid-2014.
Mr Luxon said the alliance with Virgin, in which it has a 19.99 per cent stake, and the introduction of four fare types had allowed Air New Zealand to turn around its performance on the Tasman in recent years.
‘‘The Virgin alliance ... has helped us raise our collective market share across the Tasman,’’ he said.
‘‘It’s been in place now for some time, and it has continued to deepen over time. We have teams working together on how best to drive revenue across the Tasman.’’
Air New Zealand posted a net profit after tax of $NZ100 million for the six months to December, up from $NZ38 million in the prior corresponding period. Revenue rose 3 per cent to $NZ2.34 billion.
It will pay an interim dividend of NZ3c a share on March 22, up from NZ2c previously.
Using its preferred metric, Air New Zealand reported normalised pre-tax earnings of $NZ139 million for the first half, up from $NZ33 million previously.
Shares in Air New Zealand rose 5 per cent to $1.13 today.
Air New Zealand’s long-haul operations also posted their first profit since the global financial crisis in 2008, which Mr Luxon attributed to ‘‘getting our network right and improving our sales execution’’.
The airline expects its pre-tax earnings in the second half of this financial year to ‘‘comfortably exceed’’ those in the same period in 2011-12.