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Air NZ defends rights issue

By Phil Boeyen, ShareChat Business News Editor

Friday 3rd November 2000

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Air New Zealand is defending itself against investors who claim they were not fully informed about the airline's financial position prior to taking up a rights issue in the company.

Several weeks ago when the airline announced its full year result it was relatively bullish on its future prospects, and announced a one-for-three rights issue at $1.50 per share.

However at its AGM this week the company painted a bleaker picture due to continuing increases in fuel costs, weaker Australian and New Zealand currencies, and increased competition in Australia, where its subsidiary Ansett operates.

Media reports claimed the NZSE is looking at the rights issue in light of the new profit warning. Air New Zealand A shares have dropped to below $1.50 in trading since the AGM, closing Friday at $1.47.

Late Friday afternoon the airline issued a statement saying its directors remain confident of the company's ability to achieve a sound financial result for FY2001 despite their announcement on Wednesday about increasing costs and competition.

"The statement to the Annual Meeting however also identified the potential for improvements in the outlook due to increasing demand from inbound tourism, fare increases and cost savings as well as the expected significant financial benefits expected from the integration of Air New Zealand and Ansett."

"These factors and other initiatives underway to realise non-trading profits, reinforce the Board's view that statements as to prospects made in the Investment Statement and Prospectus in their entirety remain valid."

The directors also noted that the Investment Statement and Prospectus outlining the offer of new shares, which closed at 5pm Friday, contained the following advice: "The current economic climate, characterised by high fuel prices and foreign exchange volatility has negatively impacted the current trading results, and is making any forecast for the current financial year difficult to make with a high degree of accuracy."

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