Airlines `ripe for competition'

By RICHARD BRADDELL

WELLINGTON - Air New Zealand and Qantas are ripe for competition on their transtasman routes out of Wellington if they do not step up their capacity, according to utilities investor Infratil.

Infratil said the two airlines were operating at loads in excess of 90 per cent of seats.

Passengers out of Wellington were often having to go to Australia via Auckland or Christchurch, or put off travel altogether.

Either way, there was little incentive to cut prices, lots of pent-up demand and plenty of headroom for a discount operator such as Virgin, or a new Kiwi Air, to come in.

Lloyd Morrison, a principal of Infratil's management company, Morrison and Co, said the seat shortage was because the two airlines suspended aircraft purchases during the Asian crisis.

But more flights were expected in the second half of the year.

That was good news for Infratil, which owns 66 per cent of Wellington International Airport. The airport's earnings before interest, tax, depreciation and amortisation in the last year of $19.1 million were $1.5 million below budget, largely owing to the impact of the Ansett pilots' strike.

Infratil yesterday reported a net profit of $34.2 million in the year ended March 2000, up from $26.6 million in 1999.

The result included a net $22.2 million surplus from the sale of 16 per cent of CentralPower.

In addition to an improving performance from Wellington Airport, Infratil anticipates that 26 per cent-owned TrustPower, its largest investment with a market value of $187 million, will perform better this year, in part helped by the guidance from the two Infratil appointees it now has on its board.

The managers said that Infratil's shareholders' funds at year end, of $168.5 million, would be closer to $355 million were its investments valued at market value.

With assets equal to 14 per cent of the total already lined up for sale, Infratil could take on investments worth $100 million in the present year.

While it admits to no particular targets, Mr Morrison said there were plenty of opportunities and it was a great time to invest in New Zealand, "if you believe in New Zealand."

New Zealand was "very down in the dumps" in the minds of foreign investors who were concerned at the signals from the new Government, he said.

As a result, assets were priced at very attractive levels.