Qantas currently owns Redeemable Convertible Notes with a face value of $98 million and which would account for 4.2% of Air New Zealand's share register, if they were converted to ordinary shares.

This shareholding was approved by the New Zealand Government as the first step in a much closer alliance between the two airlines proposed in 2003.

The alliance was subsequently rejected by the New Zealand Commerce Commission and approved by the Australian Competition Tribunal.

Air New Zealand will convert the note to debt and repay Qantas over four years as part of the negotiated transaction, if its application for a code share is granted and the independent audit is completed to both airlines satisfaction.


Ends

Issued by Air New Zealand Public Affairs Ph: +9 336 2761

NOTE: The content of all Air New Zealand media releases are accurate at the time of issue, as stated at the top of each release. For updates on any changes, please contact Air New Zealand.

Air New Zealand is proud to be a member of Star Alliance. The Star Alliance network was established in 1997 as the first truly global airline alliance to offer worldwide reach, recognition and seamless service to the international traveller. Its acceptance by the market has been recognised by numerous awards, including the Air Transport World Market Leadership Award, Best Airline Alliance by both Business Traveller Magazine and Skytrax. The member airlines are: Adria Airways, Air Canada, Air China, Air New Zealand, ANA, Asiana Airlines, Austrian, Blue1, bmi, Continental Airlines, Croatia Airlines, EGYPTAIR, LOT Polish Airlines, Lufthansa, Scandinavian Airlines, Shanghai Airlines, Singapore Airlines, South African Airways, Spanair, SWISS, TAP Portugal, Turkish Airlines, THAI, United and US Airways. Aegean Airlines, Air India, Brussels Airlines and TAM have been announced as future members. Overall, the Star Alliance network offers 19,500 daily flights to 1,071 airports in 171 countries.

For more information about Air New Zealand visit www.airnewzealand.com and for more information about Star Alliance visit www.staralliance.com.