Qantas buys into Air New Zealand

The widely predicted tie-up would allow the carriers to restructure their operations and cut costs but still needs approval by regulators in both countries.

Air New Zealand's domestic and international operations would remain independent and take on management of Qantas' services to, from and within New Zealand.

Qantas chief executive Geoff Dixon said the deal would secure jobs at the carriers and boost tourism between the countries.

Competition concerns

The deal had been discussed for about a year after the New Zealand government pumped NZ$1bn into the carrier last December, giving it a 82% stake.

The carriers dominate their domestic markets and the routes between the two island states.

The Australian competition authorities expect and investigation to last about four months.

"At first glance, it's anti-competitive and would need to be shown to be of sufficient public benefit to outweigh that detriment," said Professor Alan Fels, chairman of the Australian Competition and Consumer Commission.

Air New Zealand shares rose 12% to 0.56 New Zealand cents.