Air NZ into bankruptcy again

[Wizofoz]

the original sum must still be repaid

MOR,

Not necessarily so. The NZ goverment invested in AIRNZ by buying a majority interest in the form of newly issued shares. They are a shareholder not a creditor.

1 Billion shares worth 0= a return of 0. Creditors get paid out in a bankruptcy, not shareholders.

[stillalbatross]

You lot bleating about fuel prices are missing the point. The airline is losing market share and going down the toilet with or without the fuel prices. For some reason you seem to have forgotten everyone is paying more for their fuel, not just poor little Air NZ so in that respect (Emirates aside) all airlines are struggling to cope. And the high NZ dollar is offsetting the price of oil which is paid in USD so when the NZ dollar drops to 60 cents as most economists predict, there is going to be even more bleeding.

It would appear that there isn't really a place in the world for a little niche player like Air NZ and it would be far better operating as a division of Qantas. Unfortunately that won't happen just yet as the big fish little pond kiwi approach chugs along. Much like the NZ stockmarket, which refuses to accept it's slowly dying, loses companies to Australia and can't scrape together any venture capital in NZ to get NZ businesses going, the era of Air NZ doing what it's always done is well and truly over.

Plenty seem to have forgotten that the primary reason Cushing lead them into the Ansett Aust was because he didn't see Air NZ's survival long term with its current market share and population base.

The airline is stumbling back to where it was 5 years ago pre Ansett and survivability-wise nothing has changed. It is doomed if it goes it alone and fuel prices are just another nail in the coffin of it in it's present form.

And MOR 2.5 cents per share at a buck and 20 is about a 2% return on the billion and a bit that the govt loaned. That is crap in comparison with what other airlines are paying dividend wise and I'll wager that investor confidence is way low because they don't like what they see, a very sick company with poor long term prospects.

[petitfromage]

$US vs $NZ

Personally I think the kiwis are lucky!

4yrs ago the pacific peso ($NZ) was worth $US0.33....today it is worth US$0.69.

Things would have been twice as bad a few years back and will be again very soon.

As the US puts up interest rates the $US will strengthen....and then the sh1t will really hit the fan downunder.

QF will not be exempt either, these are the good old days; things are only going to get gloomier so tighten you boots, its going to be a fun ride (to watch!)

[Speeds high]

Air NZ announced profit today, and looks pretty good all things considered.

On the investment thingie, did the Government not bail airNZ out as in investment in the country, ie they were looking at the bigger picture.

[MOR]

Speeds high

Quite right, a return on investment should not be seen in purely monetary terms. For a start, the government didn't have to pay out millions in state benefits to unemployed Air NZ workers. Keeping Air NZ alive was a good idea from several different angles.

stillalbatross

Seen from a standard Australian viewpoint (ie a little one-eyed). Niche players are often the most profitable- ask Mr Branson. Oh, and you might like to check your facts - the government didn't spend "a billion and a bit". The government invested NZD885 million in Air NZ, and have a 82% equity stake in the company. It is a public company, with shareholders.

Interesting that a "very sick company" has just posted a healthy profit.

[stillalbatross]

Keeping Air NZ alive was a good idea from several different angles

have to politely disagree with you there, much like protectionism and an inability to cope with market forces, the Govt walzing in to prop up a sick company because it couldn't survive on a level playing field reeks of stupidity that will eventually catch up with it.
The whole idea that by putting in 885 million saves jobs is a sad socialist approach that has no place in a freemarket economy. Air NZ wasn't about to die, the brand was (and still is) too lucrative it just would have traded under different circumstances.

Niche players are often the most profitable- ask Mr Branson

VB is taking a hammering at the moment and if you look at where niche players eventuallly go in the airline industry, swallowed up or spat out, you would see that it is a difficult place for Air NZ to be. Though I agree that the niche approach remains the most viable if they want to remain with some degree of independence.

It is a public company, with shareholders

Love that, after the 5:1 dillution of shares and the hammering of the share price my $50000 invested 5 years ago is worth about $6000 today.

Which makes 2.5 cents in real terms less than half a cent a share dividend.


But I'd haveto agree with Norris that Auckland Airport is a bad joke. Turning the Taxiway into a Runway because the profits have disappeared off elsewhere when the main runway has been due for upgrade since the late 70's is third world.

[MOR]

have to politely disagree with you there, much like protectionism and an inability to cope with market forces, the Govt walzing in to prop up a sick company because it couldn't survive on a level playing field reeks of stupidity that will eventually catch up with it.

Yes, I put that badly. What I meant that was from the governments point of view it was a good idea.

Artificially propping up companies is never as good idea. However, I am not convinced of your assessment that Air NZ wasn't in very deep trouble... I doubt that Helen would take the considerable political risk of investing in Air NZ if they were not very close to failure.

Besides, your argument appears to defeat itself. On the one hand you are implying that Air NZ was a sick company, on the other you are saying that the brand is too lucrative to die and the company could just trade under different circumstances. What different circumstances, exactly?

VB is taking a hammering at the moment and if you look at where niche players eventuallly go in the airline industry, swallowed up or spat out, you would see that it is a difficult place for Air NZ to be.

VB is only a small part of Branson's empire. Virgin Atlantic is a niche player and seems pretty healthy to me. Of course VA took a beating in the early days, if only from the BA "dirty tricks" campaign... that is part and parcel of being a niche (or any) player. However, they are fine now.

Love that, after the 5:1 dillution of shares and the hammering of the share price my $50000 invested 5 years ago is worth about $6000 today.

Such a short-term view. I see the price was up 2c yesterday, and I'm sure it will continue to rise as the company gets back on track. Let's see where it is in two years, right now it is only just starting the climb out of the valley. Give it time.

After the first Gulf War, virtually all airlines saw their share values fall through the floor. Most bounced back. I'm sure Air NZ will too.