Air N.Z. Slides as Investors Fret at Failure of Virgin Purchase
By Gavin Evans
Wellington, Sept. 5 (Bloomberg) -- Air New Zealand Ltd. shares plunged after Virgin Blue rejected its takeover offer, raising concern that the revival of unprofitable Australian unit Ansett Holdings Ltd. will take longer than investors had hoped.
The airline's Class B shares, which anyone can own, fell 6.6 percent to close at 99 NZ cents, while Class A shares, reserved for New Zealanders, fell 3.3 percent to 89 NZ cents. Air New Zealand offered A$250 million ($130 million) for Virgin Blue.
Air New Zealand, 25 percent owned by Singapore Airlines Ltd., wants to raise NZ$1 billion ($431 million) to upgrade Ansett's fleet, needed to compete with Richard Branson's Virgin Blue and Qantas Airways Ltd., Australia's No. 1 carrier.
"It's difficult to envisage when this company can return to profitability,'' leading investors to question whether the carrier will be able to raise the cash, said Simon Botherway, head of equities at Arcus Investment Management Ltd. in Auckland.
In addition, jet fuel prices, which added nearly NZ$286 million to the airline's first-half costs, have gained 16 percent the past six weeks.
The question here is WILL SIA pay NZ$1.31 per
share
when todays price is NZ$0.99