Air NZ into bankruptcy again
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Air NZ into bankruptcy again
With the govt down $100 million (and counting) and oil prices soaring and profits getting hammered and losing hkg tax hearing and competition increasing and share price in the toilet will Air NZ still be around by Christmas?
Oil price floors Air NZ shares
24.08.05
By Chris Daniels
Soaring jet fuel prices have hammered Air New Zealand's share price, as the airline prepares to announce a new chief executive and unveil its profits for the past year.
The national carrier yesterday became the first in the region to launch a new round of fuel surcharge increases, including boosting domestic fares 4.5 per cent from a week tomorrow.
It was quickly followed by Qantas, which last night also increased its fuel surcharges - its fifth such rise since May last year.
Following the news, Air New Zealand's shares hit a record low of $1.20c before recovering to trade a cent higher at $1.22.
Its shares have dipped below that level just once before, on September 24, 2001, as the airline teetered on the brink of bankruptcy.
At that time they were technically trading at 88c but yesterday's record low is measured in adjusted terms - following a five-for-one share consolidation this time last year.
The fuel surcharge means the cost of short-haul flights across the Tasman and on Pacific Island routes will increase $10 and long-haul sectors will go up by $20.
The surcharge for flights from New Zealand to Britain is going up by $20 to reach $152 each way.
Benchmark Singapore jet fuel prices have increased by 60 per cent since the start of this year, but have gone up only 1 per cent since the surcharge was last raised, in early April.
Chief financial officer Rob McDonald said the airline could no longer sustain the extra cost of fuel.
Just two months ago it was expected that fuel would account for around 20 per cent of the airline's annual costs, at around $623 million.
Unveiling the increased surcharge this week, McDonald said this year's fuel bill would now top 30 per cent of costs.
And despite the new surcharge, Air NZ would still not be fully recovering the higher cost of jet fuel.
The latest share price means the Government is $80-100 million out of pocket on its $1 billion investment in Air New Zealand, for which it paid an average of $1.30 a share.
The impact of high fuel prices on company profits will be top of the agenda next Monday, when Air New Zealand announces its profits for the June year.
In February, it paid its first dividend in four years - 2.5c a share.
It said it expected to pay another 2.5c a share, which should be announced next week.
Expectations of a $240 million pre-tax profit were shelved in June, when the airline said the impact of oil prices meant it was more likely to match earlier forecasts of $220 million.
One of the problems facing the airline is that it must renew expiring hedge contracts at much higher levels.
Many of the world's airlines have announced increases in their fuel surcharges over the past two weeks, including some of the big US carriers.
* Air NZ yesterday said it had reached a deal with Hong Kong tax authorities over disputed back taxes.
The Hong Kong Inland Revenue Department last year said an Air New Zealand subsidiary owed it $47 million in back tax from its formation in 1989 to 2002.
The airline said that extending the Hong Kong IRD's approach to include later years "could add a further $60 million, giving a potential exposure of $107 million".
Rob McDonald said the company was "highly satisfied with the outcome," and the settlement would have "no negative material impact on the company".
The airline will not say exactly how much of the back tax it has agreed to pay.
Oil price floors Air NZ shares
24.08.05
By Chris Daniels
Soaring jet fuel prices have hammered Air New Zealand's share price, as the airline prepares to announce a new chief executive and unveil its profits for the past year.
The national carrier yesterday became the first in the region to launch a new round of fuel surcharge increases, including boosting domestic fares 4.5 per cent from a week tomorrow.
It was quickly followed by Qantas, which last night also increased its fuel surcharges - its fifth such rise since May last year.
Following the news, Air New Zealand's shares hit a record low of $1.20c before recovering to trade a cent higher at $1.22.
Its shares have dipped below that level just once before, on September 24, 2001, as the airline teetered on the brink of bankruptcy.
At that time they were technically trading at 88c but yesterday's record low is measured in adjusted terms - following a five-for-one share consolidation this time last year.
The fuel surcharge means the cost of short-haul flights across the Tasman and on Pacific Island routes will increase $10 and long-haul sectors will go up by $20.
The surcharge for flights from New Zealand to Britain is going up by $20 to reach $152 each way.
Benchmark Singapore jet fuel prices have increased by 60 per cent since the start of this year, but have gone up only 1 per cent since the surcharge was last raised, in early April.
Chief financial officer Rob McDonald said the airline could no longer sustain the extra cost of fuel.
Just two months ago it was expected that fuel would account for around 20 per cent of the airline's annual costs, at around $623 million.
Unveiling the increased surcharge this week, McDonald said this year's fuel bill would now top 30 per cent of costs.
And despite the new surcharge, Air NZ would still not be fully recovering the higher cost of jet fuel.
The latest share price means the Government is $80-100 million out of pocket on its $1 billion investment in Air New Zealand, for which it paid an average of $1.30 a share.
The impact of high fuel prices on company profits will be top of the agenda next Monday, when Air New Zealand announces its profits for the June year.
In February, it paid its first dividend in four years - 2.5c a share.
It said it expected to pay another 2.5c a share, which should be announced next week.
Expectations of a $240 million pre-tax profit were shelved in June, when the airline said the impact of oil prices meant it was more likely to match earlier forecasts of $220 million.
One of the problems facing the airline is that it must renew expiring hedge contracts at much higher levels.
Many of the world's airlines have announced increases in their fuel surcharges over the past two weeks, including some of the big US carriers.
* Air NZ yesterday said it had reached a deal with Hong Kong tax authorities over disputed back taxes.
The Hong Kong Inland Revenue Department last year said an Air New Zealand subsidiary owed it $47 million in back tax from its formation in 1989 to 2002.
The airline said that extending the Hong Kong IRD's approach to include later years "could add a further $60 million, giving a potential exposure of $107 million".
Rob McDonald said the company was "highly satisfied with the outcome," and the settlement would have "no negative material impact on the company".
The airline will not say exactly how much of the back tax it has agreed to pay.
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Let's hope they will still be around, the industry doesn't need anymore airlines going under.
On another matter will they do an Air Canada and cancel some of their aircraft orders? Or maybe delay them
On another matter will they do an Air Canada and cancel some of their aircraft orders? Or maybe delay them
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well I reckon the 1,000 shares I have in Airnz was a shot in the dark in the first place.....bought them after 9/11...by the time all the bean-counters get done with the place.......,the management pukes get their "golden parachutes" ......the pilots take another paycut........tell you what ,Ill buy you all a singlet and wrap them in Airnz share paper.......there you go ,see I knew they would come in handy for something...........BUGGER!!!!!!!!!!!
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Maaaate,
Don't worry about it. Stick the certificates in the bottom of a drawer and leave them there. One day, a long time in the future, you never know.....when someone invents a jet engine that runs on bull****, Air NZ and all the other airlines will be worth a fortune.
Meanwhile, you've got nice drawer-liners!
At least you only bought a thousand.........
Don't worry about it. Stick the certificates in the bottom of a drawer and leave them there. One day, a long time in the future, you never know.....when someone invents a jet engine that runs on bull****, Air NZ and all the other airlines will be worth a fortune.
Meanwhile, you've got nice drawer-liners!
At least you only bought a thousand.........
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Saw a bit on the telly last night on how Ralphy had done all these great things for anz, what a joke all he did was ride the wave of a $885 million dollar nz tax payer bail out.....took a look over his sholder to see what a few other airlines were doing to save money, implerment a few changes and boom he's saved the day!
On one hand Ralph Norris is saying that anz is a profitable company now and into the futhure, but when he was asked by the comerse commishion why the company needed to join with QF he said it was vital to the companys long term survival and even took a parting shot at the commishion on his leaving speach. So what is it is kuz??
Rember the Rats are always first off a sinking ship.........
On one hand Ralph Norris is saying that anz is a profitable company now and into the futhure, but when he was asked by the comerse commishion why the company needed to join with QF he said it was vital to the companys long term survival and even took a parting shot at the commishion on his leaving speach. So what is it is kuz??
Rember the Rats are always first off a sinking ship.........
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Air NZ should just do what they did last time they were struggling.
Why don't they buy say, Jet*. Get Jet* to pay for all the fuel used by both airlines and just suck it dry. Hey, worked last time with Ansett.
No wonder the fuel price is really hurting them - they not used to having to pay for it.
I never worked for Ansett or any of the subsiduries but will NEVER fly with this airline as long as I live!
Why don't they buy say, Jet*. Get Jet* to pay for all the fuel used by both airlines and just suck it dry. Hey, worked last time with Ansett.
No wonder the fuel price is really hurting them - they not used to having to pay for it.
I never worked for Ansett or any of the subsiduries but will NEVER fly with this airline as long as I live!
Last edited by Boney; 25th Aug 2005 at 07:48.
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give it a rest boney, given the fact it was qantas's former number 2 man running the show at the time, maybe there was a motive behind it all strong/dixon/jackson sent toomey over to deal with air nz and ansett and deal with them he did
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Plas Teek
Nah, go on, I think you post something about that...
Air NZ got what they paid for with Ansett.. a big, money-absorbing, failure. It was dead long before Air NZ got it.
Norris and Air NZ may have received a cash injection from an investor (not a handout as the Origin Pacific sycophants will tell you), but if he hadn't used it wisely, and implemented the correct sweeping changes, Air NZ would have been bankrupt again shortly thereafter.
As it is, they are simply doing what other big carriers are doing - and many of those are making large profits.
Having said all that, if they can't survive in the current climate, they should be allowed to die - assuming a merger with Qantas is permanently off the cards. Norris was right about that.
Nah, go on, I think you post something about that...
Air NZ got what they paid for with Ansett.. a big, money-absorbing, failure. It was dead long before Air NZ got it.
Norris and Air NZ may have received a cash injection from an investor (not a handout as the Origin Pacific sycophants will tell you), but if he hadn't used it wisely, and implemented the correct sweeping changes, Air NZ would have been bankrupt again shortly thereafter.
As it is, they are simply doing what other big carriers are doing - and many of those are making large profits.
Having said all that, if they can't survive in the current climate, they should be allowed to die - assuming a merger with Qantas is permanently off the cards. Norris was right about that.
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27/09
At a time when the world economy is going pretty well, (without looking at any down sides around the corner) this airline must be able to perform well in the current conditions irrespective of the fuel price.
From what I'm reading it isn't performing at all well (and it's going to get a whole lot worse) so I don't see why the government should wade in and prop it up if the business plan it's got isn't currently working. Flog it off to Qantas instead, or if we're really lucky there might be more than one interested party (unlikely after the buttf*ck the NZ govt dished out to Singapore last time)
Eventually it will have to be looked at as a business that must make money, not some charity basket case that pleads to the government every 5 minutes that it needs another handout because it's sustained survival is for the good of the country. It's pretty obvious it isn't.
Plenty of other good companies, including competition that Air NZ put under, haven't got jack from the government.
At a time when the world economy is going pretty well, (without looking at any down sides around the corner) this airline must be able to perform well in the current conditions irrespective of the fuel price.
From what I'm reading it isn't performing at all well (and it's going to get a whole lot worse) so I don't see why the government should wade in and prop it up if the business plan it's got isn't currently working. Flog it off to Qantas instead, or if we're really lucky there might be more than one interested party (unlikely after the buttf*ck the NZ govt dished out to Singapore last time)
Eventually it will have to be looked at as a business that must make money, not some charity basket case that pleads to the government every 5 minutes that it needs another handout because it's sustained survival is for the good of the country. It's pretty obvious it isn't.
Plenty of other good companies, including competition that Air NZ put under, haven't got jack from the government.
If a terrible set of events, beyond control of AirNZ employees, sets into motion mass retrenchments or worse, collapse, there are thousands of ex- Ansett people in airlines all around the world happy to reciprocate the support and good will received from AirNZ staff during our terrible period.
Although I feel for all AirNZ employees, I especially feel for the large number of former Ansett staff, sympathetically recruited by AirNZ post collapse, who may have to go through it all again.
Although I feel for all AirNZ employees, I especially feel for the large number of former Ansett staff, sympathetically recruited by AirNZ post collapse, who may have to go through it all again.
The national carrier yesterday became the first in the region to launch a new round of fuel surcharge increases
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I don't know why they don't let the thing sink. Be a lot less burden on the tax payer.
She got rid of the Air Force, which I think was a damned sight more important to the counties defence etc., than an outfit keeping a "select" few in employment at great cost to the tax payer.
She got rid of the Air Force, which I think was a damned sight more important to the counties defence etc., than an outfit keeping a "select" few in employment at great cost to the tax payer.
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Air NZ is not a burden on the taxpayer in any way, shape or form.
Air NZ does not receive any taxpayer assistance.
If you are referring to Helen investing in them - it was an INVESTMENT , not a handout. They have to give it back, with interest.
It is no different to Pero and his mates investing in Origin Pacific.
In fact the two are very similar - Air NZ was dead without the government, Origin was even deader without Pero and his mates. At least Air NZ paid it's bills, unlike Origin.
It constantly amazes me that allegedly intelligent pilots don't understand the difference between an investment and a handout.
Air NZ does not receive any taxpayer assistance.
If you are referring to Helen investing in them - it was an INVESTMENT , not a handout. They have to give it back, with interest.
It is no different to Pero and his mates investing in Origin Pacific.
In fact the two are very similar - Air NZ was dead without the government, Origin was even deader without Pero and his mates. At least Air NZ paid it's bills, unlike Origin.
It constantly amazes me that allegedly intelligent pilots don't understand the difference between an investment and a handout.
MOR,
You are being rather naive. An investment is made because the investor sees an opportunity to make a good return on that investment. The NZ government bailed out AIRNZ for purely political reasons. It knew it would carry the can if the airline collapsed (rightly so too!!) because of it’s inept handling of the whole fiasco.
An investment with no prospect of a return=handout
You are being rather naive. An investment is made because the investor sees an opportunity to make a good return on that investment. The NZ government bailed out AIRNZ for purely political reasons. It knew it would carry the can if the airline collapsed (rightly so too!!) because of it’s inept handling of the whole fiasco.
An investment with no prospect of a return=handout
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No, I think you are being naive. There is every prospect of a return - even if Air NZ went bankrupt, the assets and delivery positions are worth quite a bit.
Also, an "investment with no prospect of a return" does NOT equal a handout. Even if there is no return, the original sum must still be repaid (and will be, out of the remains, should Air NZ fail). A "handout" is given with no expectation of ever seeing the money again, which I doubt Helen intended.
More to the point, the share price doesn't accurately reflect the health of company, merely the markets confidence, and that is in turn largely affected by external factors such as fuel prices.
Anyway... we shall see...
Also, an "investment with no prospect of a return" does NOT equal a handout. Even if there is no return, the original sum must still be repaid (and will be, out of the remains, should Air NZ fail). A "handout" is given with no expectation of ever seeing the money again, which I doubt Helen intended.
More to the point, the share price doesn't accurately reflect the health of company, merely the markets confidence, and that is in turn largely affected by external factors such as fuel prices.
Anyway... we shall see...
stillalbatross
So Air New Zealand is the only airline that has introduced a fuel surcharge, I think there is a post on this thread that mentions at least one other airline that has a surcharge.
Have to agree on this point, the Government didn't make any friends here.
Where has it been reported that Air New Zealand has been asking for more money from the Government.
You must be on a different page. I still don't see any facts to back up your headline. Your posts seem to be more sour grapes.
At a time when the world economy is going pretty well, (without looking at any down sides around the corner) this airline must be able to perform well in the current conditions irrespective of the fuel price.
or if we're really lucky there might be more than one interested party (unlikely after the buttf*ck the NZ govt dished out to Singapore last time)
Eventually it will have to be looked at as a business that must make money, not some charity basket case that pleads to the government every 5 minutes that it needs another handout
You must be on a different page. I still don't see any facts to back up your headline. Your posts seem to be more sour grapes.