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Air New Zealand released a strongly-worded statement to the ASX on Friday shutting down reports that it has held discussions with Virgin over a possible merger.
The airline’s chair, Dame Therese Walsh, wrote, “Air New Zealand confirms that it has not been approached, and is not in discussion with any parties, regarding a potential merger transaction.
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“Air New Zealand remains in compliance with its NZX continuous disclosure obligations.”
It comes after The Australian earlier reported that investment banks Goldman Sachs and Jarden were offering Virgin assistance about a possible deal, which it claimed would involve a back door dual listing in both countries.
Air New Zealand previously owned nearly 20 per cent of the Australian carrier, before selling to Chinese conglomerate Nanshan Group for $260 million in 2016.
Both airlines have mounted strong recoveries from COVID despite posting heavy losses in the last financial year.
In 2020, Air New Zealand cut around 4,000 jobs, or around 30 per cent of the business, in an attempt to reduce the wage bill by $150 million to survive COVID.
However, over the last year, it has begun rehiring hundreds of flight attendants and pilots and now employs more than 8,000 people.
It posted a net loss after taxation of NZ$591 million for the 2022 financial year, despite its operating revenue rising to NZ$2.7 billion.
Virgin meanwhile recently recorded an underlying loss of $386.7 million in the last financial year – significantly worse than the $76.8 million recorded in the previous corresponding period but far better than Qantas’ underlying loss of $1.86 billion.
Revenue rose by 45 per cent to $2.2 billion, but it couldn’t offset an expense bill that led to a statutory loss of $565.5 million.
Chief executive Jayne Hrdlicka said the loss was a “good result in the context of the last year”.
“It’s not one we would like to see again in the future, but it’s a result that speaks to the transition out of a really tough period as an industry into a period that looks pretty bright,” she said. “We are forecasting a profit for the 2023 financial year and a period of continued growth.”
Virgin Australia entered administration in 2020 before Bain beat out Cyrus Capital Partners to purchase the airline.
The purchase included cutting axing 3,000 roles, scraping the Tigerair brand and initially downsizing the business’ 737 fleet from 85 to 56, as well as removing all other aircraft models. It recorded a staggering $3.1 billion loss during its last financial year before the takeover.
However, with COVID-19 restrictions now largely removed, domestic aviation has rebounded to near pre-pandemic passenger numbers, peaking at 97 per cent in June.
The recovery gave Virgin the confidence to announce last month it would acquire another four MAX 8s to take its total domestic fleet to 92 Boeing 737 aircraft.
It marked a significant increase from its original intention of having just 58 aircraft when it emerged from administration.
Rod Pickin
says:Any merger/business discussion agreement between ANZ and VOZ apart from any commercial agreement is truly fanciful. There is too much history between the two operators, it just would not work plus, I would expect that the NZSX and the ASX would pour heaps of ice water over any merger moves. In any event, ANZ is expanding whilst VOZ is enveloping into a constrained domestic network operation only looking to a attract a big bucks take over sometime soon. That’s what third party investors are about and they are very good at it.