KEY POINTS:
Air New Zealand shares fell sharply yesterday on concerns that Dubai Aerospace Enterprise's offer for Auckland International Airport would mean more competition on key routes for the national carrier.
After the release of Dubai Aerospace's $3.80 cash and scrip offer, Air New Zealand shares fell 15c to $2.54. Analysts said the market saw the deal as a potential negative for Air NZ because of Dubai Aeropace's links with rival airline Emirates.
Emirates and Dubai Aerospace have a common chairman and the Dubai Government is a significant shareholder in both companies.
Ricky Ward of Tyndall Asset Management said expectations were that Emirates would use Auckland as a hub. "That invokes further competition on the transtasman route, and clearly that's detrimental to Air New Zealand." Tyndall was aware of rumours that Emirates had been eyeing Auckland as a potential hub for some time.
It is understood that Auckland is viewed as the second best option for a hub linking China and India with South America. Sydney would be the preferred option but is already too congested for Emirates to upscale.
Dubai Aerospace was quick to dismiss any suggestion of a link with Emirates yesterday. Although they share the same chairman they were stand-alone business units which operated at "arms length", the company said.
Stewart Milne, executive director of the Board of Airline Representatives, was optimistic all airlines would benefit from Dubai's ownership of the airport. "With a new owner with an international perspective, our hope would be that airport charges would reduce."
