$3 million top-up call for Origin Pacific
$3 million top-up call for Origin Pacific
Origin Pacific is understood to be looking for more capital to shore up its balance sheet as the Nelson-based regional airline continues to fight its way back from the brink.
Director and 25 per cent shareholder Mike Pero has resigned from the board and stood aside from marketing responsibilities.
In May last year, creditors agreed to write off 60 per cent of the $11.4 million they were owed, to let Origin keep flying after its code share agreement with Qantas ended.
However, an industry analyst said the airline now appeared to be seeking up to $3 million in capital.
Potential investors were being shoulder-tapped on an individual basis, the analyst -- who had seen financial information on the airline -- said yesterday.
Origin Pacific chairman Robert Inglis said the airline "would never rule out" an opportunity for new investment but he would not comment further.
The analyst said the airline was facing tough competition from Air New Zealand, and lacked the marketing budget to match it. The figures suggested Origin could be "slightly cashflow positive", but not actually making a profit.
At least one regular supplier who demanded on-the-day cash payment said Origin appeared to be surviving on a "hand to mouth" basis.
When a large bill was due such as for wages or fuel, on occasion, the airline could not pay immediately.
However, some operationally critical creditors, such as airports said Origin was largely sticking to an agreement to pay its bills as they fell due.
Mr Inglis said the financial position of the airline was "continually improving".
"Since we have had to face a state-funded competitor it has challenged us and we have had to restructure the business, but the benefits of that are all starting to flow now.
"We have reduced our operation to one that is tighter and a network that we can sell satisfactorily, focused on the very consistent air freight business that is growing," Mr Inglis said.
"Compared to last winter, we are feeling very confident the way the tide is turning."
Mr Pero, a former mortgage broker, said he wanted to devote more time to his new role as chief executive of a fledgling flight simulator business in Christchurch, in which he also has a 25 per cent stake.
He will be replaced by Mainfreight director and former Air Post chairman Emmet Hobbs as an independent director from Friday.
Mr Pero said he was happy with the way Origin was performing and had confidence in new chief executive Dallas Hay to take the airline forward.
Mr Pero bought into Origin after selling his 90 per cent of Mike Pero Morgages for $13.5 million. He was confident that his investment in the airline was secure.
Hutt Valley obstetrician Howard Clentworth heads another group which bought another 25 per cent of the airline with Mr Inglis retaining the remaining 50 per cent share.
At the time of his investment, Mr Pero said Origin's conservative image would get the same marketing treatment as his high profile mortgage business.
However, the need to pay creditors and ongoing costs such as fuel and lease payments had put the rebranding on hold.
"I just had to sit on my hands."
As a result his skills as a marketer were not being used to the full.
- NZPA