View Full Version : $3 million top-up call for Origin Pacific

18th Jul 2005, 02:14
$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.


18th Jul 2005, 04:52
"Top up call for Origin" This sounds like a forever reoccurring thorn in OPALs side. I wonder if Dallas Hay stopped undoing all Mike's work then they would possibly be in a better state financially? Eg: Pero decided to change the livery to blue/green subsequently all OPAL letters, advertising material, badges, id holders etc were changed, now Hay is changing back to the old blue and gold livery...money wasted in every sense.

Why can't anybody ever agree on anything at OPAL and stick to it?


18th Jul 2005, 05:39
why didnt robert just keep a hold of air nelson when he had the chance

18th Jul 2005, 06:14
Robert Inglis

"Since we have had to face a state-funded competitor it has challenged us and we have had to restructure the business

Haven't we heard this all before.

Sure Air New Zealand has the government as a major shareholder. However the events that lead up to Aunty H taking a share holding were in no small way due to government interference and ineptitude. The government had a duty to help rectify the situation.

Previous governments stood by and allowed a foreign own airline operate in New Zealand (Ansett) while the same priviledges were not allowed for Air New Zealand to operate in Australia, even though both countries had signed an open skies agreement. I believe that this was the starting point of the Ansett Australia debacle since the only way into Australia for Air New Zealand was a shareholding in an Australian airline

The present government muddied the waters when Air New Zealand was seeking approval for Singapore Airlines to take a shareholding after the Ansett debacle and Sept 11, effectively driving Singapore away.

I don't see the government shareholding as state funding, Air New Zealand is not continually going back asking for more money.

Robert Inglis got lucky the first time around with Air Nelson. His small provincial airline grew rapidly to what it is today due to Air New Zealand spinning off its provincial routes and the fact that he had some buddies on the Air NZ board who saw that he got some of the better routes. He hasn't been so lucky this time

I'm all for competition but I wish we were spared the same old excuses when he is not doing well, and he cannot blame this on the fact that the government has a shareholding in Air NZ

18th Jul 2005, 08:31
I don't see the government shareholding as state funding

Quite right. The government made an investment, they didn't give Air NZ a handout. If Inglis has any credibility left, he should be able to attract investment without too much difficulty. He may find it hard to find suckers like Pero though. Of course the constant bitter sniping will make many roll their eyes.

The truth is that Origin is unlikely to ever be anything other than a marginally profitable operation. That is a real pity, as NZ needs an airline like Origin, but the airline was started badly, squandered it's resources with profligate spending, and is now reaping what it sowed in the early days. Sad.

Don Won
19th Jul 2005, 07:45
A little birdy told me that OPAL was back in talks with Qantas............. now that the whole anz deal has fallen through, maybe they are need some $$ to expand again??
I see that a mainfreight director/ former air post chairman is in the frey, which can only be a good thing with possible links into more of the airfreight market in nz??
My call is that if OPAL are calling for more coin it's the knockout round..... or things are on the up..... nobody would be stupid enough to invest good money after bad.
Have OPAL actually sent any of the J41's back?
I do know that they are still recruting even that been very slowly, hope they can hold it together the 41s is still a very cool ship to have floating round the traps

19th Jul 2005, 22:15
Aren't the "surplus" J41's parked up at WB?

Plas Teek
20th Jul 2005, 12:35
Gee, first time for a while I've seen (or read) him bagging Air NZ. You know, the airline that let him walk away with over $300,000 oweing for maint work.....

20th Jul 2005, 21:08
It's my understanding OPAL currently have 3 J41's, 2 of these are leased from Canada and the other is leased from an Auckland based group of businessmen who bought it some months back along with the OPAL building. The 2 surplus 41's are gathering dust on the tarmac at WB, they were prepared to fly offshore but for some reasong have not gone.
I have seen OPAL staff pilfering parts so there must still be some gentlemens agreeement between all parties concerned?

I use to fly a J41 overseas and they are a great plane to fly and to those guys who think the new Q 300's will smoke them, then think again.