Air NZ To Shed Non-Essential Services.
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Air NZ To Shed Non-Essential Services.
TOP STORY
SUNDAY, 25 NOVEMBER 2001
T O P S T O R Y
Air NZ to sell top ski fields
25 November 2001
By MIRIYANA ALEXANDER
Cash-strapped Air New Zealand is to begin shedding non-essential services - including some tourism jewels - in a bid to nurse itself back to financial health.
The "For Sale" signs go up tomorrow on the troubled airline's South Island ski field operation, NZSki.com, which runs the popular Coronet Peak and Remarkables fields in Queenstown and the Mt Hutt field in Canterbury.
The airline is also reviewing its engineering operations, its terminal services and other parts of its business.
The move comes as part of the government shake-up of the airline. Final details of the government's $885 million bail-out are to be released tomorrow.
The government has made it clear it will not bail out Air New Zealand and then walk away, instead instructing the airline to take a hard look at its operations. It has been told to identify risks and how to handle them and to review all non-essential services.
Air New Zealand undoubtedly needs money, with the market speculating the $885 million bail-out is not enough to keep the airline flying.
NZSki.com is part of the Mt Cook Airlines group, which Air New Zealand took 100 percent control of in 1991 (it bought a 47 percent stake in 1985).
Air New Zealand spokesman Mark Champion confirmed the plans.
It is not known how much Air New Zealand would get for the ski business but the company is expected to attract major international and national interest.
NZSki.com is New Zealand's biggest ski field operator, with around 40 percent market share. This year's New Zealand snow sport revenue was expected to be $50 million, giving NZSki.com a share of around $20 million. This season half a million people skied the fields, half from overseas, and the business is a significant foreign exchange earner. It employs 34 permanent staff with winter seasonal staff totalling 850.
Air New Zealand's joint engineering business with international giant Pratt and Whitney was launched in May when Pratt and Whitney paid Air New Zealand $57 million for a 51 percent share of the business. It employs 350 staff and before September 11 planned to increase that to more than 600.
However, recent reports said staff lay-offs were on the cards with the post-September 11 aviation downturn.
Analysts were surprised Air New Zealand had moved so quickly but said it made sense. "They needed the money so they didn't have much choice. Unfortunately it expanded its engineering business before September 11 so that hit them but it has a fantastic international reputation and it's also highly profitable so there should be no shortage of interest in it and the ski fields," said an analyst.
Another analyst said Air New Zealand needed to return to its air operations because that's what the government wanted.
NZSki.com had apparently expected the move and sources said it would benefit from a new owner prepared to invest in the business.
NZSki.com general manager Duncan Smith said the company was strong and successful with a good track record. "There's strong opportunity for growth so it's an exciting opportunity," he said.
As part of the bail-out, the government has already lent Air New Zealand $300 million which will switch to convertible preference shares, while share prices the government pays for the remaining $585 million will be announced tomorrow.
It is tipped to pay around 30c a share, up from the 24c originally indicated, giving it an 80 percent stake in the airline.
SUNDAY, 25 NOVEMBER 2001
T O P S T O R Y
Air NZ to sell top ski fields
25 November 2001
By MIRIYANA ALEXANDER
Cash-strapped Air New Zealand is to begin shedding non-essential services - including some tourism jewels - in a bid to nurse itself back to financial health.
The "For Sale" signs go up tomorrow on the troubled airline's South Island ski field operation, NZSki.com, which runs the popular Coronet Peak and Remarkables fields in Queenstown and the Mt Hutt field in Canterbury.
The airline is also reviewing its engineering operations, its terminal services and other parts of its business.
The move comes as part of the government shake-up of the airline. Final details of the government's $885 million bail-out are to be released tomorrow.
The government has made it clear it will not bail out Air New Zealand and then walk away, instead instructing the airline to take a hard look at its operations. It has been told to identify risks and how to handle them and to review all non-essential services.
Air New Zealand undoubtedly needs money, with the market speculating the $885 million bail-out is not enough to keep the airline flying.
NZSki.com is part of the Mt Cook Airlines group, which Air New Zealand took 100 percent control of in 1991 (it bought a 47 percent stake in 1985).
Air New Zealand spokesman Mark Champion confirmed the plans.
It is not known how much Air New Zealand would get for the ski business but the company is expected to attract major international and national interest.
NZSki.com is New Zealand's biggest ski field operator, with around 40 percent market share. This year's New Zealand snow sport revenue was expected to be $50 million, giving NZSki.com a share of around $20 million. This season half a million people skied the fields, half from overseas, and the business is a significant foreign exchange earner. It employs 34 permanent staff with winter seasonal staff totalling 850.
Air New Zealand's joint engineering business with international giant Pratt and Whitney was launched in May when Pratt and Whitney paid Air New Zealand $57 million for a 51 percent share of the business. It employs 350 staff and before September 11 planned to increase that to more than 600.
However, recent reports said staff lay-offs were on the cards with the post-September 11 aviation downturn.
Analysts were surprised Air New Zealand had moved so quickly but said it made sense. "They needed the money so they didn't have much choice. Unfortunately it expanded its engineering business before September 11 so that hit them but it has a fantastic international reputation and it's also highly profitable so there should be no shortage of interest in it and the ski fields," said an analyst.
Another analyst said Air New Zealand needed to return to its air operations because that's what the government wanted.
NZSki.com had apparently expected the move and sources said it would benefit from a new owner prepared to invest in the business.
NZSki.com general manager Duncan Smith said the company was strong and successful with a good track record. "There's strong opportunity for growth so it's an exciting opportunity," he said.
As part of the bail-out, the government has already lent Air New Zealand $300 million which will switch to convertible preference shares, while share prices the government pays for the remaining $585 million will be announced tomorrow.
It is tipped to pay around 30c a share, up from the 24c originally indicated, giving it an 80 percent stake in the airline.
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BUSINESS
MONDAY, 26 NOVEMBER 2001
B U S I N E S S S T O R Y
Further asset sales by Air NZ not ruled out
26 November 2001
Air New Zealand is understood to be "seriously considering" the sale of part of its engineering business, potentially worth between $100 million and $150 million, according to industry analysts.
The airline confirmed yesterday it is selling its South Island skifield business, but market analysts said that would be worth just a few million, and was a small part of the company.
The ski business, NZSki.com, includes Coronet Peak, The Remarkables and Mount Hutt, and may be worth $3 million to $5 million. It was seen as a distraction for Air New Zealand management.
But the real jewel in the crown that may be sold is the engineering business, though an airline spokesman said engineering was under review for job cuts, not for sale.
"Engineering is not under review for sale, but certainly under review in terms of cutting back staff. Everything is under review (for possible staff cuts)," a spokesman said yesterday.
But Air New Zealand could not rule the possible sale of its interest in an engineering joint venture in Christchurch. "We are looking across the group" he said.
The airline lost $1.4 billion in the year to June, after writing off $1.3 billion on the failed Ansett airline in Australia.
Air New Zealand shares have risen to 37 cents recently on the back of a 27 per cent fall in jet fuel prices in the past two months.
At present prices, the fall could save the airline as much as $80 million a year. The airline is now buying 80 per cent of its fuel at low spot prices, which is giving it a significant benefit.
Other assets would be identified for sale when the company decided to call for expressions of interest, rather than tagging them now as possible sales, but property sales are expected too.
The Government is bailing out Air New Zealand to the tune of $885 million, taking an expected stake of 80 per cent of the airline, though the deal is not yet complete.
Air NZ said recently it would cut the equivalent of 800 full-time positions - about half of them in management - from a total staff of 10,000.
Air New Zealand has a high international reputation for the quality and expertise of its engineering division, including a half share in an engineering business in Christchurch servicing engines from around the world. This could be packaged up with other parts of engineering for sale.
Engineering makes between $10 million and $15 million a year, indicating a value of up to $150 million one industry analyst, who did not want to be named, said yesterday.
It would be sad to see Air New Zealand sell off a large part of its engineering business the analyst said. But because of its financial problems the airline had little choice but to sell non-core assets and cut debt as much as possible.
Air New Zealand would always need its own engineering division of some sort, but it could package up a part of the operations for sale, buying back services from the sold business the analyst said.
Potential engineering business buyers could include international engine maker Pratt and Whitney, aircraft maker Lockheed or even other airlines.
Air New Zealand has a joint venture engineering business with Pratt and Whitney in Christchurch, which was launched earlier this year. Pratt and Whitney paid more than $50 million for 51 per cent of the business, employing about 350 staff. This interest could be put together with other engineering operations for possible sale, the analyst said.
Workers at Air New Zealand's joint venture engineering workshop in Christchurch are bracing themselves for layoffs as one of the key profit units suffers from the world aviation slowdown. International airlines send engines to Christchurch for repair, but sales are down an estimated 80 per cent, sources said last week.
MONDAY, 26 NOVEMBER 2001
B U S I N E S S S T O R Y
Further asset sales by Air NZ not ruled out
26 November 2001
Air New Zealand is understood to be "seriously considering" the sale of part of its engineering business, potentially worth between $100 million and $150 million, according to industry analysts.
The airline confirmed yesterday it is selling its South Island skifield business, but market analysts said that would be worth just a few million, and was a small part of the company.
The ski business, NZSki.com, includes Coronet Peak, The Remarkables and Mount Hutt, and may be worth $3 million to $5 million. It was seen as a distraction for Air New Zealand management.
But the real jewel in the crown that may be sold is the engineering business, though an airline spokesman said engineering was under review for job cuts, not for sale.
"Engineering is not under review for sale, but certainly under review in terms of cutting back staff. Everything is under review (for possible staff cuts)," a spokesman said yesterday.
But Air New Zealand could not rule the possible sale of its interest in an engineering joint venture in Christchurch. "We are looking across the group" he said.
The airline lost $1.4 billion in the year to June, after writing off $1.3 billion on the failed Ansett airline in Australia.
Air New Zealand shares have risen to 37 cents recently on the back of a 27 per cent fall in jet fuel prices in the past two months.
At present prices, the fall could save the airline as much as $80 million a year. The airline is now buying 80 per cent of its fuel at low spot prices, which is giving it a significant benefit.
Other assets would be identified for sale when the company decided to call for expressions of interest, rather than tagging them now as possible sales, but property sales are expected too.
The Government is bailing out Air New Zealand to the tune of $885 million, taking an expected stake of 80 per cent of the airline, though the deal is not yet complete.
Air NZ said recently it would cut the equivalent of 800 full-time positions - about half of them in management - from a total staff of 10,000.
Air New Zealand has a high international reputation for the quality and expertise of its engineering division, including a half share in an engineering business in Christchurch servicing engines from around the world. This could be packaged up with other parts of engineering for sale.
Engineering makes between $10 million and $15 million a year, indicating a value of up to $150 million one industry analyst, who did not want to be named, said yesterday.
It would be sad to see Air New Zealand sell off a large part of its engineering business the analyst said. But because of its financial problems the airline had little choice but to sell non-core assets and cut debt as much as possible.
Air New Zealand would always need its own engineering division of some sort, but it could package up a part of the operations for sale, buying back services from the sold business the analyst said.
Potential engineering business buyers could include international engine maker Pratt and Whitney, aircraft maker Lockheed or even other airlines.
Air New Zealand has a joint venture engineering business with Pratt and Whitney in Christchurch, which was launched earlier this year. Pratt and Whitney paid more than $50 million for 51 per cent of the business, employing about 350 staff. This interest could be put together with other engineering operations for possible sale, the analyst said.
Workers at Air New Zealand's joint venture engineering workshop in Christchurch are bracing themselves for layoffs as one of the key profit units suffers from the world aviation slowdown. International airlines send engines to Christchurch for repair, but sales are down an estimated 80 per cent, sources said last week.
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i have to question the logic behind a
possible sale of the christchurch
engineering base,i bet its one of the only
parts of air nz that are actually making
money,not only does it service its own aircraft, but many from around the world
as well as hercules from the raaf, and usaf.
possible sale of the christchurch
engineering base,i bet its one of the only
parts of air nz that are actually making
money,not only does it service its own aircraft, but many from around the world
as well as hercules from the raaf, and usaf.
Join Date: Sep 2001
Location: wherever the money smells good.......
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From what I understand, all the regional carriers under the Air NZ tail are making "good" profits.But a dry sponge soaks up a lot of water - leaving the regionals to suffer ??! 
