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Ansett continues Hazelton purchase

By Phil Boeyen, ShareChat Business News Editor

Wednesday 29th November 2000

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Air New Zealand (NZX: AIR VA AIRVB) subsidiary Ansett is continuing to purchase shares in Australian regional airline Hazelton and says it will stay in the market until full details of a higher bid from Qantas are released.

Earlier today the company said it has increased its relevant interest in the airline to 21.365%.

Rival airline Qantas upped the ante in the bid for Hazelton late last week, offering A$1.20 a share, 33% higher than Ansett's 90-cents-per-share bid. The shares have been trading at A$1.25.

Qantas says a successful bid for Hazelton would, over time, give regional Australia better access to the established domestic and international route network of Qantas.

Hazelton has endorsed the Qantas offer as representing good value for its shareholders, and has conditionally recommended the offer.

A report by Ernst and Young had estimated the fair market value of 100% of Hazelton to be in the range of A$0.69 to A$0.91 per share, although it said its assessment does not include any special value that a strategic purchaser might attribute to Hazelton.

The report said important considerations included on-carriage revenue, market share, rationalization of costs and key Kingsford Smith Airport regional slots.

It's understood the purchase of Hazelton would help Ansett to rationalise its regional services. The airline is under pressure from market leader Qantas, as well as smaller rivals Impulse Airlines and Virgin Blue, and has been losing market share this year.

An announcement today that Qantas plans to buy 31 new aircraft as part of its long-term fleet plan to provide for market growth means the pressure on Ansett in the Australian domestic market is unlikely to ease anytime soon.

Included are 13 Airbus A330-200 and A330-300 aircraft which Qantas says will provide for growth on domestic routes with flexibility for regional international operations.

Qantas chairman, Margaret Jackson, says the purchase is designed to provide the airline with optimum flexibility to respond to changing competitive and market conditions over the 10-year period.

"This fleet plan also signals clearly the Board's intention to continue the strategies that have served Qantas well. These include managing carefully the asset base, maintaining the emphasis on productivity and efficiency and meeting the competition in a vigorous manner."

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