Forum Archive Index - May 2001

["Peter Maiden" <pmaiden@xtra.co.nz>]

 A few weeks ago we had a discussion on the numbers games and I quoted some research from  Peter Bernstein who found that on the average 20% of earnings in any one year had vanished five years later due to write-offs etc, and that write-offs tend to deepen in years when earnings growth slows down or goes negative.

 

Looks like Air New Zealand are going to play the same game this year.

 

The Sydney Morning Herald report yesterday predicts a loss this year as high as $220M and that they will take the opportunity to make potentially massive revisions to the value of certain assets, dragging the bottom line still lower through one-off charges.

 

This on top of last years one off charge of  $786.2m to bring a previously unrecognised tax liability into the P&L.

 

Not surprising that AIR want to do more write offs as this year is shot for them anyway - may as well get all the bad stuff out of the way.

 

However isn't a company ultimately judged (which is reflected in the share price) on the earnings stream over an extended period of time.

 

Snoopy and others who have studied AIR intimately - any idea what these one off charges might total?

 

Snoopy - have you updated your earnings forecast in light of the recent events?

 

Foxes in engines last week and last night a flight coming back to Wellington with a sick pilot on board who was taken off in a wheelchair and taken to hospital.

 

Surely good fortune has to come to them to soon.

 

Cheers

 

Peter