Michael Pascoe writes:

If Qantas and Air New Zealand get their trans-Tasman
code-share deal past the competition regulators, the days of
bargain basement fares to across the ditch might be over, but Qantas’ bottom
line might be as much as $35 million better off.

Goldies JB Were transport analyst Paul Ryan
is telling clients the code-share deal would result in a 9 per cent
in Qantas’ capacity on the route, higher aircraft utilisation and:
”Earnings: Could drive $35m in benefits for QAN on a route that is
profitable currently.”

It’s just part of the picture Ryan is
painting as part of his “outperform” recommendation on the Roo.

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Slowing capacity growth at rival international
carriers, strong cost reduction track record and a robust domestic consumption
outlook augur well for the re-emergence of strong earnings momentum in
FY07. Recent share price weakness has
created a strong value opportunity on a 3-6 month view.

Ryan has a valuation of $4.15 on Qantas, which is rather at odds with
the present market view of $3.46.