Sharechat Logo

Air NZ shares reach for the oxygen masks

By Phil Boeyen, ShareChat Business News Editor

Monday 10th September 2001

Text too small?
Speculation that Air New Zealand (NZSE: AIRVA) could be forced to dump its loss-making Ansett subsidiary, sparking an even larger write-down than forecast, further knocked the beleaguered airline's shares in early Monday trading.

Opening in a weaker market following Wall Street's blues, investors have once again marked down the airline's A and B shares, reflecting the nervousness surrounding both this week's full-year results and the company's overall viability.

The airline has already foreshadowed an operating loss and a write-down in Ansett, which is losing around A$1.3 million a day.

Acting Air NZ chairman, Jim Farmer, says the company is working with major shareholders Brierley and Singapore Airlines, and with the New Zealand government, to ensure the future of Air New Zealand's domestic and international services.

The company has also been discussing Ansett's future with the Australian government, but says discussions with Qantas in relation to Ansett have been terminated because of adverse comments made by corporate watchdog, the Australian Competition and Consumer Commission.

While the New Zealand government is unlikely to offer a cash injection to the nation's airline, a more plausible route will be to underwrite some of the recapitalisation plans.

The Australian government may also choose this path because one of the last thing's it will want to see in a crucial election year is thousands of jobs - not to mention upcoming school holiday plans - disrupted if Ansett dives into receivership.

Air New Zealand says it's board plans to make a further announcement on, or before, its full-year results are due this Thursday.

The airline's shares have been in freefall recently, losing around 40% of their value in the past couple of weeks.

Last week ratings agency Standard & Poor's lowered Air New Zealand's long-term corporate credit rating to B+ from BB+ and its short-term rating to C from B.

The ratings remain on CreditWatch with negative implications where they were first placed in April.

S&P says the latest downgrade reflects the expected Ansett writedown, ongoing losses at Ansett and the company's lack of financial flexibility.

However while the airline's shares took an early nose dive, they firmed later in the day after CEO Gary Toomey said he had been in talks with Australian Prime Minister John Howard over the future of Ansett.

In early trading the A shares hit 60 cents but ended the day up two cents on Friday's close at 72 cents. The B shares fell as low as 71 cents just after the market opened Monday but closed considerably stronger at 88 cents.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Air NZ deputy warns against Qantas cash
Air NZ loses momentum in November
One Air NZ share by Christmas
Air NZ investors have little choice - report
Star Alliance pulls together
Wrightson chairman to steer Air NZ
Tourism body gets $2 million shot in the arm
Free flights cost more
More cash promised as Air NZ share price settled
Air NZ agrees to sell Ansett flights