Air NZ cleared over profit warning

By Phil Boeyen, ShareChat Business News Editor

Tuesday 29th May 2001

Air New Zealand (NZSE: AIRVA) has been cleared over the timing of last November's profit warning following complaints to the Market Surveillance Panel.

The warning, which took the market by surprise, occurred just days before a rights offer for 189 million new shares in the company was due to close.

The airline's stock took a dramatic dive after the company revealed its first quarter results were well behind budget and it was headed for a substantially lower full-year profit than the year before.

The Market Surveillance Panel says the coincidence in timing prompted some complaints and the request for the panel to investigate.

However in its findings the panel has concluded that the airline did not breach any listing rules and could not have been expected to release the directors' forecasts any earlier than 1 November.

The basic question for the panel was whether Air New Zealand released the information with "sufficient immediacy" for the purposes of the relevant listing rules.

"Specifically, the issue was whether the information could have been released sooner so as to properly inform the market for existing shares and enable shareholders to make a more informed response to the offer of rights for new shares," says the report.

Air NZ told the panel that there had been wide general publicity over such factors as exchange rates and fuel prices and that shareholders would not be surprised at the news it was affecting the airline's operations.

"However, the situation at Ansett Holdings which produced poor results in July and August, as well as in September, was not known to the market," the report states.

Although Air NZ senior management received an initial Ansett forecast on October 16, a more formal review continued right up to the November 1 announcement date.

While the report has found that the airline did not breach any listing rules regarding the timing of the profit warning, it says information about the plight of Ansett could have been given on November 1 rather than waiting until November 3 to clear up the matter.

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