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Aviation History
1996
1996 - 0529.PDF
ANZ optimistic of Ansett deal KEVIN OTOOLE/LONDON AIR NEW ZEALAND (ANZ) remains optimistic that it can go ahead with the proposed deal with TNT to acquire up to half of Ansett Australia. The agreement with TNT, which owns half of Ansett together with News Corporation, is still under negotiation, but has yet to clear tough competition hurdles in Australia and New Zealand. ANZ management, neverthe less, believe that the $300 million deal can go through. "The direc tors remain optimistic that the continuing negotiations will result in the acquisition of a substantial interest in the company," say ANZ chairman Bob Matthew and man aging director Jim McCrea, in the airline's half-year report. ANZ's long-running efforts to buy into Ansett hit another prob lem at the end of January, with an initial ruling from New Zealand's Commerce Commission that the deal offended the country's strict competition laws. The Commission can still allow the deal to go through, provided that the airlines can prove that a merger would benefit consumers. The concern surrounds the dominance that ANZ would hold in its domestic market when com bined with the Ansett New Zea land operation. In its first-half report, ANZ says that its current domestic operations, which ac count for about one-fifth of group sales, give it a market share of around 70%. Negotiations are continuing with the Commission over possible compromises, including the possi bility of separating out the Ansett NZ operation. A final decision is expected on 20 March. Overall, ANZ held its perfor mance steady over the six months to the end of December. Net prof its edged down a little, to NZ$135 million ($91 million) in 1995, largely because of weaker growth from in-bound tourist traffic. In-bound tourism, which makes up the largest slice of ANZ's traffic, had been growing at more than 14% in 1994, but that growth has slowed to around 6.5% over the past year. The number is now on the rise again, and the airline expects this to show through in a stronger second half. Over the half year, the airline saw a 17% increase in international seat capacity. • Private Qantas delivers on performance Q ANTAS IS HOLDING its own, despite competi tion in international and dom estic markets, says chairman Gary Pemberton, revealing the group's first financial figures since it completed privatisa tion in mid-1995. Pemberton reports that Qantas pushed up profits by more than 15%, to A$ 148 mil lion ($110 million) in the first half of its financial year to December. He adds that the improvement is in line with the target set in the privatisa tion prospectus. The forecast is for a full-year profit of A$237 million for the whole of 1995/6. Recovery in domestic oper ations again led the improve ment, with profits growing by more than 30%, to A$93 mil lion. Pemberton says that, with improvements in produc tivity and aircraft utilisation, Qantas is now in a position to match any potential increase in domestic capacity by com petitors without ordering any new aircraft. He adds that latest market- share figures show Qantas continuing to hold its domestic share at around the 53% mark. The airline's domestic traffic grew by 12.5% over the half- year with yields and load fac tors unchanged. Profits on international operations stayed at around A$163 million, despite a 5.6% growth in traffic. Pemberton says that international market share is still close to 40%, but warns that this is expected to fall as Ansett Australia Airlines and Air New Zealand win new route rights. The group's cost-cutting plan is running ahead of sched ule, says Pemberton, with the half of the A$300 million in savings promised for 1995/6 already secured. • Ansett and Air New Zealand are expandingfast — but will they ever merge? Air Canada chairman Harris to step down HOLLI$ HARRI$, Air Can ada's chairman and chief executive, will step down at the air line's next annual meeting on 14 May. His replacement is Lamar Durrett, a former Delta Air Lines executive who came to Air Canada with Harris in 1992. Harris stays as executive chairman. Durrett worked at Delta for 23 years before moving with Harris to Continental Airlines in 1990. Subsequently, both men were forced out in a management dis pute. Durrett was president of Continental's System One com puter-reservations subsidiary and joined Air Canada as executive vice-president of technical opera tions and corporate services. Durrett's appointment is a blow to Jean-Jacques Bourgeault, execu tive vice-president and chief oper ating officer, who had been expected to replace Harris. Harris has said that he would leave Air Canada when his five- year contract expires next Feb ruary and either start a new airline using surplus Air Canada Mc Donnell Douglas DC-9s or join a US carrier. The news came as Air Canada released a disappointing set of results for 1995. Net profits more than halved, to C$52 million ($38 million), against a forecast of C$100 million. The 1994 profit, however, had been bolstered by asset sales. Harris says that Air Canada showed a record operating profit for 1995, despite its heavy expan sion, including a shift to interna tional routes. • FLIGHT INTERNATIONAL 6 - 12 March 1996 13
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