24 Jan 2011

Air NZ makes profit on trans-Tasman route

5:51 am on 24 January 2011

Air New Zealand says its loss-making trans-Tasman routes have swung into profit this summer.

Chief executive Rob Fyfe says strong passenger demand and fuller planes have made the routes profitable for the first time in years.

Both Air New Zealand and its new Tasman alliance partner, Virgin Blue, have traditionally lost money on the trans-Tasman routes.

Last week Air New Zealand bought a 15% stake in the Australian carrier for $189 million.

Mr Fyfe says the equity stake cements their relationship, and he's hoping the tie up with Virgin Blue will make the Tasman routes profitable in the longer term.

He says the Virgin Blue alliance is expected to implemented by mid-year and Air New Zealand would expect to see its trans-Tasman performance improve during the 2012 financial year.

Mr Fyfe says the purchase of a 15% stake in Virgin Blue is purely an investment in what he believes is an undervalued growth company.

He says Air New Zealand is not interested in taking up any seats on Virgin Blue's board for at least the next six months as a gesture that its investment is friendly.

My Fyfe says he's hoping the two airlines can explore growth opportunities together, including new long haul flights from Australia, though he won't say where to just yet.