Forum Archive Index - December 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Capitalist,
 

> Here is Gareth's article FYI.
> 
>Qantas deal - just deserts for a mug public 
>industry policy - 27 November 2002 
>
><snip>
>
>

Thanks for that.   My memory of the 'Air Ansett affair' is slightly 
different to the version that fits into Gareth's late 1980s 
economantra.

The NZ government bail out was to save our export industries who 
relied on air freight and tourism.  I am sure that Gareth is right 
and that if Air NZ had been allowed to collapse a new carrier would 
have come in - eventually.  

But the 'eventually' would have ruined many fresh seafood and flower 
exporters in the meantime, and damaged NZs reputation in the process. 
 It is much easier to keep your customers than have to fight to get 
them back.  Faced with this. a $1bn 'bail out' was actually pretty 
cheap.  Particularly so when the value of the governments stake on 
the market is double what they paid.  No private investor would have 
been able to get away with putting in so little capital!

The Singapore Airlines offer to boost their shareholding to 49% was 
always subject to due diligence.  Even if the government had fast 
tracked their approval for SIA to buy up, they couldn't make the SIA 
cash appear.  IMO it would not have come.

The reason that the government stepped in was that there was no 
private sector bail out option.  Gareth seems to think that some 
overseas white knight airline would come to our rescue.  But, 
Singapore Airlines, an Arabian Airline and Qantas excepted, all the 
white knghts satin outfits were stained with red ink at the end of 
2001.   A white knight suffering a deep lance wound to the chest is 
not going to be thinking about rescuing any damsel in distress on the 
other side of the ocean at the bottom of the South Pacific.

Qantas, the world's most successful airline could not get their year 
2002 cash issue away to fund future substantial cash initiatives.  So 
if the world's most successful airline can't raise the cash from 
the savvy public, just who does Morgan think this white knight will 
be?   I don't think the argument 'theoretically someone will come' 
stacks up.

SNOOPY



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