Virgin best placed to win from chaos

Air New Zealand provided extra planes to allow Virgin to cater for Melbourne Cup traffic. Photo / Getty Images

The damage to the Qantas brand after the airline grounded its fleet is unlikely to bolster Air New Zealand's business, analysts say, but could benefit its partner Virgin Australia.

Air New Zealand stepped into the chaos over the weekend, working with Virgin - in which it holds a stake of almost 20 per cent - to help stranded passengers after Qantas, the world's 10th-largest airline, dealt with industrial disputes by locking out staff and grounding aircraft.

Air New Zealand's Australasia general manager, Bruce Parton, said the airline provided extra planes to allow Virgin to divert aircraft to Australian domestic routes in a bid to limit disruption ahead of today's Melbourne Cup.

He travelled to Australia to work on contingency plans on Sunday and said the Qantas check-in area at Sydney's airport had been "utter chaos", with the airline's passengers complaining about their treatment.

Goldman Sachs analyst Marcus Curley said the grounding was damaging for the Qantas brand but would provide little benefit for Air New Zealand. The Australian airline accounted for a very small share of the New Zealand market, and the NZX-listed carrier already held the lion's share of transtasman business, he said.

Curley said the grounding was more valuable for Virgin because big-spending customers who were influenced by such issues were mostly based in Australia.

Virgin is Qantas' main rival across the Tasman.

"Air New Zealand has a 19 per cent stake in [Virgin], so indirectly you'd say they'll be benefiting but I wouldn't expect to see a lot of direct benefits," he said.

Air New Zealand shares closed unchanged at $1.05 last night, while Virgin shares closed up 4 per cent at A37.5c on the ASX.

Forsyth Barr analyst Rob Mercer said any benefit this country's national carrier gained from the disruption would be marginal.

"The sort of things that are helping Air New Zealand are the things it has being doing itself like its service focus."

Mercer said challenges such as fuel costs and consumer demand had a much bigger impact on the airline's fortunes.

"These things are long-term issues and they will ultimately be more important contributors to profitability."

Qantas flights resumed yesterday afternoon after Fair Work Australia - the country's workplace relations tribunal - ended the industrial action and ordered both parties back to the negotiating table.

Alan Joyce, the airline's chief executive, praised the decision, which prevents unions from taking any further strike action over their demands for pay rises and job security clauses under contracts being negotiated.

Workers have held rolling strikes and refused to work overtime for weeks out of fear some of Qantas' 35,000 jobs would be moved overseas.

The strikes have been blamed for a slump in the airline's bookings.

"The important thing is that all industrial action is now over and we have certainty," Joyce said in Sydney yesterday.

"We will be returning to business as usual over the next 24 hours."

He said the airline would press ahead with plans to set up an international business in Asia despite losing more than $100 million in earnings during the industrial strife.

The court ruling is a victory in the airline's battle with unions representing pilots, aircraft mechanics, baggage handlers and caterers, whose rolling strikes have forced the cancellation of 600 flights this year, disrupted travel for 70,000 passengers and cost Qantas A$70 million ($75 million).

Shares in Qantas - which according to the Sydney Morning Herald have been the worst performing on the ASX this year, losing 39 per cent of their value - closed up A6c at A$1.61c last night.

Qantas strife
* Around 70,000 passengers affected.
*Rolling industrial action has cost the airline $75 million this year and has been blamed for a drop in bookings.
*Flights resumed yesterday afternoon after Fair Work Australia - the country's workplace relations tribunal - terminated the industrial action and ordered both parties back to the negotiating table.

- additional reporting APNZ, AP