Air NZ denies talk of Virgin Aust merger

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

The Kiwi airline said in an NZX statement yesterday “that it has not been approached, and is not in discussions with any parties, regarding a potential merger transaction”.

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

The two were closely linked before, with Air NZ holding a 19.9 per cent equity stake. And they had a close operating alliance before an acrimonious bust-up five years ago.

A Virgin Australia spokesperson said yesterday: “We are declining to comment on this matter”. However 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 consolidate 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 after falling into voluntary administration early in the pandemic. It was then bought by Bain Capital.

A merger between the airlines would require approval of the Government, which holds 52 per cent stake of Air NZ, and from competition regulators.