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Three’s A Crowd?
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Air New Zealand’s decision to look at dumping its stake in Virgin Australia may look like an aviation version of marital break-up but if their prime rival Qantas thinks it represents a serious rift between the two members of its major Australasian competition it should think again. Selling shares is a long way from abandoning commercial partnership agreements.
Airline boards and their chief executives are as pragmatic as they come. So it should be no surprise that Air NZ, currently pumping out record profit after record profit, should take a serious look at opting out of an investment that has never provided it with returns.
According to analysts at Deutsche Bank, the Kiwi flagship has poured some NZ$480 million into building up its stake in Virgin to 25. 9 per cent – some 914 million shares – since it first invested in 2011. And that doesn’t include another NZ$131. 2 million – Air NZ’s share of a NZ$470 million loan from it and fellow shareholders Singapore Airlines and Etihad Airways to give the carrier a 12-month emergency line of finance to shore up its financial position – announced just a week before Air NZ chief executive Christopher Luxon on March 30 told the world he was stepping down from the Virgin board with immediate effect. At the same time it was revealed First NZ Capital and Credit Suisse had been appointed to review its stake in the airline.
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