Air New Zealand Dismisses Virgin Merger Reports

On Friday, Air New Zealand issued a strongly worded statement to the ASX denying rumours that it has conducted negotiations with Virgin about a prospective merger.

A statement released by the airline’s chair, Dame Therese Walsh, reads, “Air New Zealand confirms that it has not been approached, and is not in negotiation with any parties, considering a prospective merger deal.”

The airline is still in sync with its NZX ongoing disclosure requirements.

Previously, The Australian stated that Goldman Sachs and Jarden, two investment banks, had offered their services to Virgin regarding a potential merger, which would include a “back door dual listing” in both countries.

Before selling its nearly 20% stake in the Australian carrier to the Chinese corporation Nanshan Group in 2016 for $260 million, Air New Zealand held almost 20% of the airline.

Despite suffering significant losses in the previous fiscal year, both airlines have substantially recovered from COVID.

To reduce the salary cost by $150 million and survive COVID, Air New Zealand slashed about 4,000 positions in 2020 or about 30 percent of the company.

Over the last year, however, it has begun rehiring hundreds of flight attendants and pilots and has a workforce of over 8 thousand.

Its operational revenue increased to NZ$2.7 billion in the 2022 fiscal year, yet it still managed to report a nett loss after taxes of NZ$591 million.

Meanwhile, Virgin recently reported an underlying loss of $386.7 million in the past fiscal year, which was much worse than the previous similar period’s loss of $76.8 million but far better than Qantas’ underlying loss of $1.86 billion.

Revenue increased by 45 percent to $2.2 billion, but it couldn’t balance a cost bill that resulted in a $565.5 million statutory loss.