Qantas flies high as Ansett falls

SYDNEY - Shares in Australian airline Qantas soared 28c, or 8.9 per cent, to $A3.43 in early trade in the wake of the collapse of Australia's second-largest airline, Ansett.

Brokers said investors were concerned about the impact of terrorism in the United States on international air travel, but Ansett remained the dominant influence on Qantas' share price.

Qantas shares closed up 19c, or 6 per cent, at $3.34.

"I'm sure people are thinking about both sides of the equation. In the short term, depending on the extent of the impact on international travel [from the terror attacks], that is a negative for Qantas," said Nomura Australia equities strategist Eric Betts.

"But in the longer term, Qantas has an embedded superior strategic position in the Australian market which would be further enhanced [by Ansett folding], and they will obviously be the dominant player for many years to come."

The Australian aviation market is worth about $10 billion ($NZ12.44 billion) a year. Qantas and Ansett have been the only major players, although Sir Richard Branson's Virgin Blue has carved out a niche as a discount operator.

Ansett's owner, Air New Zealand, has written off its entire $NZ1.3 billion investment in Ansett and withdrawn all support for the airline, letting it fall into the hands of administrators.

The administrators have suspended all of Ansett's operations, saying there was no alternative because the company had no resources.

"I feel a bit like old Mother Hubbard," administrator Peter Hedge, of PricewaterhouseCoopers, said. "On Wednesday night, I went to the cupboard and there was nothing there."

Earlier, Mr Hedge had said: "It is important to clarify that this action, to cease flight operations, is due to the lack of necessary cash or facilities to fund the operation."

The grounding of Ansett stranded thousands of travellers and sparked angry protests at airports in Australia's major cities.

Yesterday, Mr Hedge called for informal expressions of interest in Ansett's businesses.

The administrators said Ansett should not be acquired free of charge or at low cost by other airlines to increase their market shares.

"We are calling for informal expressions of interest for the various businesses within Ansett and will be developing information material on each of the businesses," they said.

They also said they were investigating the obligations of Air NZ. That would be key to the final outcome for Ansett.

- REUTERS

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