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Current as of 26/08/16 07:39PM NZST

Air NZ mulls Virgin strategy

Air New Zealand chief executive Rob Fyfe. Photo / Natalie Slade
Air New Zealand chief executive Rob Fyfe. Photo / Natalie Slade

Shareholder Air New Zealand says it is considering its options in light of Virgin Australia's proposed spin-off of its international operations.

Sir Richard Branson's Virgin Group in the UK holds 26 per cent of Virgin Australia and Air NZ has a 19.99 per cent stake.

Virgin Australia last week proposed splitting its international business into a separate, unlisted company, which could free up the domestic arm for further foreign ownership.

Australian flag carriers that operate international services cannot be more than 49 per cent foreign owned.

Air New Zealand chief executive Rob Fyfe said the airline had previously considered the implications of a Virgin Australia international spin-off, when asked about Virgin's move at last Friday's first-half results presentation in Auckland.

Fyfe said Air NZ was yet to formulate a preferred course of action or strategy.

"We are obviously evaluating the opportunities and scenarios that could unfold as a result of that announcement," Fyfe said.

"We had certainly evaluated in our scenario planning this possibility. We've been doing that for some time."

The Virgin move also raised the possibility of a cashed-up overseas airline such as Abu Dhabi-based Etihad Airways climbing on to the share register.

Virgin and Air NZ have formed a partnership on flights between Australia and New Zealand, with the alliance commencing July 2011.

Fyfe said the benefits from the alliance had so far exceeded expectations.

"Our transtasman position is as strong as it has ever been and as sustainable as it has ever been"' he said.

Shares in NZX-listed Air New Zealand, which reported a 61 per cent decline in first-half net profit, fell 3c to close at 86c on Friday.

- AAP

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