Shaken Origin picks it will be back in the black by June

By Graeme Kennedy

Friday 21st May 2004

Origin Pacific managing director Robert Inglis expects his Nelson-based airline to be operating in the black again by the end of this month following a major restructure to keep it flying.

Inglis said, however, that it would not be an easy task against an aggressive and dominant competitor in Air New Zealand and its three Link carriers.

Origin, which first flew in 1997, was carrying about one million passengers a year after rapid expansion and a code-sharing and leasing agreement with Qantas on domestic routes.

The airline lost an estimated 40% of its revenues when the arrangement with the Australian carrier was ended early this month. Origin cut 93 jobs, negotiated a deal with creditors owed about $12 million and rationalised its network in the subsequent restructure.

Some industry observers believe Origin had become too dependent on Qantas, a charge that Inglis does not entirely dismiss.

"We had developed our network around a hub and spoke system to feed regional flights into Qantas," he said. "Our expansion had all been focused on doing that. It's what both parties set out to achieve.

"But our situation is not solely because of Qantas, before the government bailed out Air New Zealand Origin was operating profitably and a number of events compromised against us.

"After the bail-out Air New Zealand re-invented itself and launched the Express model, which reduced yields considerably in provincial New Zealand. We had to match them, while the bigger airline had more ability to cross-subsidise some routes.

"We expanded our operation with the Qantas arrangement but once it became clear Qantas and Air New Zealand were developing an alliance our relationship weakened.

"We were growing and marketing our product strongly but the incentive to do that lessened as Qantas saw its future with Air New Zealand."

Qantas regional general manager Allan Williams said the planned alliance did not influence its decision, which was made for economic reasons.

Inglis said Origin's network had been rationalised and returned to its original point-to-point model with regional city pairs and routes from the regions to the main centres.

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