Air NZ denies potential merger discussions; Virgin declines to comment

AUCKLAND: Air New Zealand has responded to speculation of a merger deal with former alliance partner Virgin Australia.

Air NZ said in an NZX statement ‘‘that it has not been approached, and is not in discussions with any parties, regarding a potential merger transaction’’.

The Australian newspaper yesterday reported that VA’s owner, Bain Capital, held recent discussion with Air New Zealand about a merger of the two airlines.

The two carriers were closely linked before, Air New Zealand holding an equity stake of 19.9%.

And the airlines had a close operating alliance before an acrimonious bustup five years ago.

Both are now in recovery following the pandemic, and facing increased competition from bigger rivals.

Virgin Australia said yesterday: ‘‘We are declining to comment on this matter’’.

But The Australian quotes sources who said investment banks Jarden and Goldman Sachs were offering help on possible plans, including a deal with Australian regional carrier Rex.

‘‘Sources say that discussions have been held between New

Zealand’s national carrier and Virgin in recent weeks, although they do not suggest that the pair have necessarily progressed towards a deal at this stage,’’ The Australian reported.

While Air NZ is playing down speculation, a market source in this country said closer relationships between the two airlines made sense as more carriers consolidated operations in a tough commercial environment while rebuilding ravaged balance sheets.

Virgin is yet to revive its transtasman network although flights to Queenstown are coming.

It is concentrating on the Australian domestic market where it has about athird of the market, well short of Qantas’ share, as it rebuilds after falling into voluntary administration early in the pandemic. It was then bought by Bain Capital.

Air New Zealand also faces a renewed threat from Qantas on international flights with direct competition to its AucklandNew York route (which it is launching today).

Qantas will compete on the route from the middle of next year in a sign of the fraying of a ‘‘frenemies’’ code share and operating agreement in 2018.

Any merger between VA and Air NZ would require approval of the Government which holds a 52% stake and would need to get the approval of competition regulators.

Harbour Asset Management’s Shane Solly said there were examples of airlines merging around the world and he could see logic in VA and Air NZ getting closer.

This week giants Emirates and United Airlines — former foes — announced a code share deal which allows them to sell seats on each other’s flights. —

Zealand Herald.