QANTAS-AIR NEW ZEALAND PARTNERSHIP

Qantas Airways Limited says that a partnership between Qantas and Air New Zealand would result in both carriers maintaining independent operations and brands.

Qantas Chief Executive Officer Geoff Dixon said such a partnership would create benefits of scale and growth for both airlines.

"A partnership would enhance the long term viability of New Zealand- and Australian-owned aviation interests, while also ensuring continued strong competition within Australia, New Zealand and across the Tasman," Mr Dixon said.

Mr Dixon said at no time had Qantas suggested it wanted to merge with Air New Zealand or to seek outright control.

The Qantas proposal involved Air New Zealand:

· continuing to be New Zealand owned with a majority of New Zealand nationals on the Board;

· having a Chairman who was a New Zealander;

· having its management, head office and principal hub remaining in Auckland;

· remaining listed on the New Zealand Stock Exchange.

Mr Dixon said Qantas fully realised the transaction was a complex one which required the approval of both the New Zealand and Australian Governments, the New Zealand Commerce Commission, the Australian Competition and Consumer Commission and the Board of Air New Zealand.

The Qantas proposal would not in any way affect Air New Zealand's access to bilateral aviation rights.

Qantas also realised that the proposal could not proceed without the Ansett Group:

· commencing significant operations on the Tasman and some other competitive routes;

· starting a domestic airline within New Zealand.

"Our preliminary discussions with Singapore Airlines canvassed all these issues," Mr Dixon said.

Mr Dixon said that if discussions on the proposal proceeded as expected over the next few weeks Qantas would provide both the New Zealand Government and the Board of Air New Zealand with a detailed strategy for the partnership.

"We are certain the partnership would offer considerable benefits for both Air New Zealand and Qantas. It would create major synergies and growth and the grouping would have greater scale to compete more effectively in an increasingly competitive and consolidating global market.

"Competitive and quality airlines require substantial financial resources and an Air New Zealand - Qantas partnership would have these resources."

Mr Dixon said the New Zealand tourism industry would have nothing to fear from the proposal.

"Qantas has had a long and valuable association with tourism in New Zealand, with Qantas flying across the Tasman since 1940 and in its own right since 1961.

"We currently operate more than 200 flights a week between our two countries and we already account for about 35% of the New Zealand inbound tourism market.

"Our partnership proposal would only strengthen and enhance this effort."