Air New Zealand could breathe a sign of relief yesterday after being let off a charge of fixing prices on international cargo shipments, Craigs Investment Partners broker Chris Timms said.
The European Union yesterday fined 11 airlines a total of 799.4 million ($NZ1.4 billion) for fixing prices, which led to higher prices for businesses to move their goods.
Qantas was among these airlines but was at the lower end of the scale with a fine of 8.8 million.
A further 11 airlines, including Air NZ, had charges against them dropped because it could not be proved they participated in the cartel.
The European Commission, the EU's watchdog, said "the carriers co-ordinated their action on surcharges for fuel and security without discounts" between December 1999 and February 2006, when the EU's investigation stopped the cartel.
"Had it not been for the commission's intervention, the cartel would not have ended in 2006," competition commissioner Joaquin Almunia said.
Mr Timms said that while Air NZ would be celebrating, it had not been the best of times for Qantas.
The airline grounded its fleet of A380s after an engine explosion prompted an emergency landing in Singapore less than a week ago, then two other planes had technical problems.
The airline's shares had been down 7.4% since before the A380 incident but started to rise again yesterday, he said.
"That is probably due to the removal of uncertainty surrounding how much the airline would be fined and the realisation that the fine was the second-lowest of all the 11 airlines."
Air NZ had done well to remain profitable through 2008 and 2009, and avoiding the cartel fines was another positive achievement, Mr Timms said.
"During this period and into 2010, Air NZ has remained profitable and paid substantial dividends."
That reflected the "compelling" strategic position in most of its markets, a strong management team, a robust balance sheet, a superior product and service, innovation and its geographic position, he said.
"Given the cyclical nature of the airlines sector, news flow is often the principal driver of the share prices. We expect the balance of news flow to remain positive for Air NZ as macro trading conditions improve and demand recovers, its innovative long-haul product is launched in late 2010 and the market starts to price in a Rugby World Cup uplift."
For investors comfortable with the inherent risks and volatility of the sector, the stock remained an attractive exposure, Mr Timms said.
Air NZ shares traded lightly yesterday.
Air France-KLM received the largest fine and has to pay 310.1 million, while British Airways PLC was fined 104 million. Air France-KLM will also have to pay the 29.5 million fine for Martinair, which it now owns.
Air Canada, Cathay Pacific, Cargolux, Japan Airlines, LAN Chile, SAS, Singapore Airlines and Qantas will also have to pay fines between 8.2 million and 79.9 million.
Lufthansa escaped a fine because it blew the whistle on the cartel. All other carriers, except Singapore Airlines, had their fines reduced by between 15% and 50% for co-operating with the EU's investigation.
The US Department of Justice has already charged 18 airlines and several executives in its investigation of the cargo cartel and imposed more than $US1.6 billion ($NZ2.2 billion) in fines.
