Grant Bradley: Air NZ's gain from Qantas crisis may be short-lived

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Air New Zealand is more than a bit player in the Qantas crisis through its stake in Virgin Australia and could be a beneficiary of the pain the Flying Kangaroo is suffering.

Qantas cites as one reason for its dire predicament Virgin's access to foreign airlines' capital - the latest injection A$350 million ($386 million) in rights being taken up partly by Air New Zealand which will boost its stake to almost 25 per cent, while Middle Eastern carrier Etihad and Singapore Airlines will hold about 20 per cent each.

It follows that a wounded Qantas will be good for Virgin - and by extension Air New Zealand.

The New Zealand carrier has cemented itself as by far the most successful airline in the region and investors are liking it with its share price closing yesterday at $1.63, just short of the price at which it was sold down by the Government and close to its 12-month high.

But profiting from Qantas' distress may be short-lived.

The Australian flag carrier could come back stronger with its own equity injection and structural reform to make it leaner and meaner.

Rather than continue its MAD (mutually assured destruction) policy approach to fighting Virgin for the prized Australian domestic market, Qantas could settle for a smaller share of that pie and consolidate.

There's a further risk for Air New Zealand, and it's political. Qantas is appealing to nationalism and while the present Australian Government shows no sign of pushing back on foreign investment in Virgin, politicians will be looking at the polls to see how much damage to Qantas the public is prepared to tolerate.

And for the flying public here, there's also a risk - if Qantas pulls out of routes, leading to reduced competition, fares could go up.