New Zealand's High Court on Monday rejected as uncompetitive a proposed alliance between the country's flag carrier and Australian rival Qantas in a deal that Air New Zealand had claimed was critical to its long-term survival.
Despite the option to appeal, Qantas said the decision all but killed the proposal and that it was time to move on.
PHOTO: AFP
The High Court upheld a New Zealand Commerce Commission's decision rejecting the proposed merger across the Tasman Strait on the grounds it was anticompetitive, the airline said in a statement to the country's stock exchange.
Ralph Norris, Air New Zealand Chief Executive, said in a statement he was disappointed with the decision as the High Court had appeared to disagree with the Commerce Commission on many issues.
Under the proposed alliance, Qantas was to buy up to 22.5 percent of Air New Zealand for US$363 million to enable the two operators to cooperate on all their routes between Australia and New Zealand.
Both Air New Zealand and Qantas said the alliance was necessary to help them cope with increasing competition within the aviation industry. Air New Zealand, which is 82-percent government owned, had said the deal was critical to its long term survival.
It said in a statement that, "compelling reasons for an alliance still remain with many of our predictions now a reality with ever-intensifying levels of competition in the Australasian aviation market and airfares at all-time lows."
Since alliance talks began with Qantas over two years ago, Air New Zealand has made considerable progress turning its business around, Norris said, and a "robust platform" now exists to enable the airline to continue growing in the short to medium term.
But in the longer term, he said, the inherent volatility and intense competition in the industry made maintaining that good growth a "considerable challenge."
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