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Qantas-Virgin Blue in for 'tough fight': Moody's

Rating agency Moody’s Investors Service stated Air New Zealand's move to buy into Virgin Blue "increases competition for Qantas, as it brings Virgin Blue’s range of offerings closer to that of Qantas for international travel and will require Qantas to reduce prices to keep load factors at acceptable levels".

Moody's analysts added, however, that it would be a "tough fight", with Qantas' "dual-brand strategy and entrenched, leading position in Australia, show[ing] in the past that it knows how to counter competitive challenges".

Shares in Qantas were unchanged yesterday, while Air New Zealand gained 0.7% and Virgin Blue fell 2.3%.

Thai Airways slumped 5.5% as Thai leisure stocks experienced a sell-off, while in Korea, Korean Air jumped 4.1% and Asiana Airlines surged 7.1% on expectations of rising tourism demand during the Lunar New Year holiday (2-4-Feb-2011).

Selected Asia Pacific airlines daily share price movements (% change): 24-Jan-2011

APAD