24-Jan-2011 10:16 AM

Deutsche Bank states Australian airlines 'geographically challenged'

Deutsche Bank released a global airline report stating that Australia’s Qantas and Virgin Blue face increasing pressure to forge alliances and pursue growth strategies in partnership with Asian carriers, or risk falling behind as global airline consolidation gains pace (Australian Financial Review, 24-Jan-2011). Deutsche stated the airlines are “geographically disadvantaged” and risk losing market share to better-located airlines to the north unless they can more closely ally with Asian carriers. Deutsche’s Cameron McDonald believes Qantas is among the best airlines poised to benefit from a more consolidated industry due to its ties with the region.

Deutsche Bank: “As the largest airlines capture more market share, by definition the smallest airlines will have less. The larger the network, the more attractive it is to the most profitable revenue segments … Given the proximity to Asia and the profitability of the sector, we believe Australian and New Zealand airlines will play a role in consolidation.” Company Statement. Source: Australian Financial Review, 24-Jan-2011

Deutsche Bank: “What you’ll see more of is them [Qantas] getting access to Asian growth and consolidation with Jetstar – they wouldn’t have done that with the Qantas brand.” Cameron McDonald, transport analyst. Source: Australian Financial Review, 24-Jan-2011.

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