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SYDNEY (MarketWatch) -- Virgin Blue shares dropped on Friday after the firm received its second regulatory
knock-back to alliance plans in two days.
The Australian Competition and Consumer Commission on Friday said that it has proposed to reject an alliance
between the airline and Air New Zealand covering flights between Australia and New Zealand. The regulator said that
the proposed alliance is "likely to reduce competition in the market for trans-Tasman air passenger services."
On Thursday, the airline's declined after the U.S. Department of Transportation said that
VBA 0.40, -0.03, -6.98%
said that it wouldn't allow a tie-up between Virgin Blue and Delta Airlines (NYSE:DAL) . The
AU:VBA department said that it has tentatively concluded that the firms haven't demonstrated the
alliance would show sufficient public benefits.
0.80
Macquarie analysts said Friday that they expect the parties to try and address the DOT's
concerns but the ruling is likely to push back V Australia's breakeven point with more reliance likely to be placed on
0.60
domestic operations.
"The major issue is that Delta is likely to stay on the route for longer, resulting in capacity moderation being delayed
and making the pricing recovery tougher for all0.40
involved on the route," the analysts said.
http://www.marketwatch.com/story/story/print?guid=4158FACC-9A32-426F-AFFE-... 10/09/2010