Air NZ on the ropes
Wed "Herald Sun". .. .Air NZ on the ropes. .By GEOFF EASDOWN. .06mar02. .. .AIR New Zealand's future remains grim, with a huge loss and debt write-off due to be announced tomorrow.. . . .Kiwi taxpayers will learn the airline has probably lost up to half of the $702 million the New Zealand Government spent to acquire its 82 per cent stake and save the cross-Tasman carrier. . .UBS Warburg analyst Timothy Ross believes the beleaguered airline will post a first-half loss of about $77.78 million. . .. .But he believes it is likely to book additional costs of $307.38 million, to take the total loss and write-offs to almost $386 million. . .. .These include a one-off $150 million payment to Ansett administrators to exit the defunct Australian carrier. . .. .With about 5.5 per cent of the airline's shares now held by BIL International and 4.5 per cent by Singapore Airlines, many analysts have scaled back their coverage of Air NZ. . .. .Others, who asked not to be named, suggested a loss before abnormals ranging from $63.5 million to $79.37 million. . .. ."Maybe more," said one. . .. .Macquarie Equities analyst Arthur Lim declined to make any prediction about the size of the loss, saying: "How long is a piece of string?" . .. ."This is the perfect opportunity to wipe off as many things as they can and draw a line in the sand," he said. . .. .Mr Ross said Air New Zealand had to come clean. "If there were any more nasty surprises it would be better to see them now," he said. . .. ."If you're going to have a bad year you might as well have a stinker." . .. .Mr Ross was more upbeat about Air NZ's second-half prospects. . .. ."It's going to be a prettier picture going forward than the carnage that's behind them," he said. . .. .He believes the carrier might achieve a second-half profit of $66.6 million, cutting its full-year loss to just over $11 million. . .. .But the question yet to be answered is whether Air New Zealand will set aside in any Ansett write-off the $65.08 million outstanding to News Ltd from the 50 per cent acquisition of Ansett. . .. .UBS upgraded the stock to a "buy" last week, but other analysts said yesterday that increased competition from Qantas, the loss of the Australian feeder service and missing out on the Star Alliance network previously provided by Ansett, would weigh against Air NZ's future earnings. . .. .New chief executive Ralph Norris yesterday acknowledged the airline's concerns about competition from Qantas. . .. .He claimed the Australian carrier was using profits from its Australian operation to undercut Air NZ on domestic air travel in New Zealand. . .. .Air NZ posted the country's largest corporate loss of $1.11 billion in the year to June 2001, after writing off its investment in Ansett. . .. .Its shares last traded unchanged at A27 on the New Zealand exchange, 1 ahead of the price at which the single share class debuted in late December. . .. .Independent adviser Grant Samuel told Air New Zealand shareholders late last year the airline faced considerable financial risk despite the government aid. . .. ."Air New Zealand will not be in a financial position to sustain any further material extended downturn in business or other adverse impact," Grant Samuel advised. . .. ."The company will be dependent on the Crown's willingness to provide further loan or equity capital . . . or to support a private placement possibly to another airline." . .. .It has a five-year plan to cut debt by $1.19 billion, and to reduce gearing to below 60 per cent with 7.8 per cent annual growth.