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Air NZ confirms talks with Virgin Blue over alliance on Tasman routes

Wednesday 28th April 2010

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Air New Zealand, says it has been in talks with Virgin Blue about a potential alliance on routes across the Tasman Sea.

“Air New Zealand confirms that the airlines have been in ongoing discussions for several months but no agreement has been reached,” the Auckland-based airline said in a statement today.

The national carrier said it doesn’t plan to comment further on discussions “but will advise markets as required if an agreement is concluded.”

Shares of Air New Zealand were pared an earlier decline to be unchanged at $1.37 after the announcement. Virgin Blue was unchanged at 58 Australian cents on the ASX.

Virgin Blue is scaling up its own operations, announcing at the start of this month that it has signed an agreement with Boeing Co. to buy up to 105 new 737 aircraft, mainly to replace existing narrow body planes.

The carriers compete with airlines including Qantas Airways and Emirates on the Tasman, putting fares under pressure.

An alliance has been a fall-back option for Air New Zealand previously, and it has unsuccessfully negotiated with Qantas about a tie-up in previous years. Its monthly data, released last week, showed the number of passengers carried on the Tasman and Pacific Island routes fell 1.6% in March, to be 3.2% down in the year to date.

As a result, its trimmed capacity on those routes by 7.6%, lifting the load factor by 4.9 percentage points to 80.7%.

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