Air NZ doubles profit target but still coy about Qantas

Deputy chairman Roger France told shareholders at the meeting in Auckland that the first quarter performance was ``encouraging" and the company was moved to double its target for 2002-03 profit before unusual items and tax to about $NZ200 million ($175 million), up from the $NZ100 million it claimed to have in sight in late August.

Australian listed shares in the carrier were unchanged at 46.5c as many analysts were already working on the assumption that the old guidance was substantially in arrears of Air New Zealand's actual financial position. Qantas eased 8c to $3.65 as some investors showed their disappointment.

``Negotiations with Qantas are progressing satisfactorily," Mr France said. ``However, the issues are complex."

He said the Kiwi airline wouldn't compromise on its commitment to maintain New Zealand majority ownership and control as well as the capacity to determine its own direction strategically. It is understood Qantas and Air New Zealand are yet to agree on price and the finer details of their Tasman joint services pact.

There is speculation the airlines are considering making concessions to anti-monopoly regulators, including possibly the sale of Air NZ's budget subsidiary Freedom to preserve competition in the region.

Qantas wants to take up to a 25 per cent stake in Air NZ for as much as $520 million. A deal is expected in the next month.

Mr France said Air New Zealand's recovery program, which involves trimming routes and cutting costs, produced first quarter profit before unusual items and tax of $NZ30.4 million, compared to a $NZ51.8 million loss a year ago.

Unaudited net profit for the July to September period was $NZ17 million, putting the airline ahead of time in its December five-year financial plan.

Air New Zealand was almost driven to the wall by the collapse of its subsidiary Ansett.