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Qantas shares headed back towards $4 yesterday as speculation mounted the
airline would finally announce a $500 million alliance with Air New New Zealand,
possibly as soon as early next week.
It is believed the carriers are close to resolving key sticking points
relating to price and the finer details of a shared services agreement. Air New
Zealand has scheduled meetings to address unions and staff on Monday.
Qantas shares ended 8c higher at $3.93 with almost 9.9 million shares traded.
The ASX-listed Air New Zealand shares were up 1c to 45.5c.
Qantas, however, downplayed the speculation. ``Discussions are continuing but
no agreement has been reached," a spokesman said. ``When we have something to
report, we will."
Qantas started negotiating with Air New Zealand in May with the aim of taking
up to a 25 per cent stake in the Kiwi carrier and forging a pact to work more
closely on common routes. Qantas may pay as much as $520 million for the
interest, and inject a further $NZ100 million into Air New Zealand as part of an
associated equity raising.
More minor issues under discussion included the airlines' membership of
global alliances, commitments on feeding traffic into New Zealand, and how to
divvy up savings arising from any partnership. There has been talk that Air New
Zealand might have to divest its discount trans-Tasman carrier Freedom to Virgin
Blue and give other assurances to regulators as conditions of the deal, to
preserve competition on the route.
Virgin Blue has repeatedly said it has put its plans to expand in New Zealand
on hold until the outcome of the Qantas-Air New Zealand talks are known.
Salomon Smith Barney has estimated Qantas and Air New Zealand stand to share
potential revenue and synergy benefits worth $NZ360 million ($315 million) in
the third year of an alliance by co-operating in areas like maintenance and
services.
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