Qantas Airways Ltd agreed to buy as much as 22.5 percent of Air New Zealand Ltd for NZ$550 million (US$277 million), forming an alliance that will allow them to share routes and cut costs. Shares of both airlines rose.
Australia's biggest airline may buy the stake in three stages, initially paying NZ$0.445 apiece for convertible notes and shares equivalent to a sixth of the rival.
That's about a fifth less than Air New Zealand's share price.
Qantas's bid to dominate the market in Australia and New Zealand came after Air New Zealand almost collapsed last year. The airlines must now convince antitrust regulators that the alliance will be beneficial to travelers, or make concessions, to gain approval, analysts said.
"The big question is whether or not it will get through all the regulatory hurdles," said Bruce Low, an analyst at ABN Amro Australia Ltd. "In its proposed form, it won't."
Qantas may buy 7.5 percent more shares in the New Zealand carrier within three years. Qantas is trying to cut costs and expand to compete with rivals in the southwest Pacific region.
Air New Zealand needs funds to restore its balance sheet and buy new planes after the government last year saved it from bankruptcy in an NZ$885 million bailout.
Air New Zealand's Ansett unit, Australia's former No. 2 airline, failed in September 2001, forcing it to write off a NZ$1.3 billion investment.
Air New Zealand rose 12 percent to close at NZ$0.56, according to the stock exchange. Qantas shares rose 0.3 percent to close at A$3.94 in Sydney.
The alliance is expected to save a combined NZ$450 million within three years, Qantas said in a statement.
The gains will be shown in its earnings from the business year starting July 2003.
The airlines, which began talks in May 2001, will share seats on domestic and international flights, they said.
"Domestically in New Zealand and also on the trans-Tasman they are basically going to have a very, very dominant position if not a monopoly," Low said.
"That makes it very hard to argue that it is in the best interest of competition."
The plan may breach competition rules, the Australian Competition and Consumer Commission said in a statement. The regulator said it hasn't received a formal proposal from Qantas and Air New Zealand.
"The proposal immediately raises competition concerns for the ACCC," and a decision on the proposal will take "some months," commission Chairman Allan Fels said.
LONG FLIGHT: The jets would be flown by US pilots, with Taiwanese copilots in the two-seat F-16D variant to help familiarize them with the aircraft, the source said The US is expected to fly 10 Lockheed Martin F-16C/D Block 70/72 jets to Taiwan over the coming months to fulfill a long-awaited order of 66 aircraft, a defense official said yesterday. Word that the first batch of the jets would be delivered soon was welcome news to Taiwan, which has become concerned about delays in the delivery of US arms amid rising military tensions with China. Speaking on condition of anonymity, the official said the initial tranche of the nation’s F-16s are rolling off assembly lines in the US and would be flown under their own power to Taiwan by way
‘OF COURSE A COUNTRY’: The president outlined that Taiwan has all the necessary features of a nation, including citizens, land, government and sovereignty President William Lai (賴清德) discussed the meaning of “nation” during a speech in New Taipei City last night, emphasizing that Taiwan is a country as he condemned China’s misinterpretation of UN Resolution 2758. The speech was the first in a series of 10 that Lai is scheduled to give across Taiwan. It is the responsibility of Taiwanese citizens to stand united to defend their national sovereignty, democracy, liberty, way of life and the future of the next generation, Lai said. This is the most important legacy the people of this era could pass on to future generations, he said. Lai went on to discuss
OBJECTS AT SEA: Satellites with synthetic-aperture radar could aid in the detection of small Chinese boats attempting to illegally enter Taiwan, the space agency head said Taiwan aims to send the nation’s first low Earth orbit (LEO) satellite into space in 2027, while the first Formosat-8 and Formosat-9 spacecraft are to be launched in October and 2028 respectively, the National Science and Technology Council said yesterday. The council laid out its space development plan in a report reviewed by members of the legislature’s Education and Culture Committee. Six LEO satellites would be produced in the initial phase, with the first one, the B5G-1A, scheduled to be launched in 2027, the council said in the report. Regarding the second satellite, the B5G-1B, the government plans to work with private contractors
MISSION: The Indo-Pacific region is ‘the priority theater,’ where the task of deterrence extends across the entire region, including Taiwan, the US Pacific Fleet commander said The US Navy’s “mission of deterrence” in the Indo-Pacific theater applies to Taiwan, Pacific Fleet Commander Admiral Stephen Koehler told the South China Sea Conference on Tuesday. The conference, organized by the Center for Strategic and International Studies (CSIS), is an international platform for senior officials and experts from countries with security interests in the region. “The Pacific Fleet’s mission is to deter aggression across the Western Pacific, together with our allies and partners, and to prevail in combat if necessary, Koehler said in the event’s keynote speech. “That mission of deterrence applies regionwide — including the South China Sea and Taiwan,” he
RSS