Forum Archive Index - January 2001

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

>
>I haven't seen much discussion of AIRVA on sharechat
>recently, though there is a lot in the news at the
>moment especially regarding new appointments to
>management.   I notice quite a few chatters included
>AIRVA/B in their 2001 picks.  Has anyone got any
>opinions to share?  I was thinking of selling my small
>holding.   
> 
Michael, Air New Zealand is probably one of only a
handful of New Zealand companies that could truly be
described as world class and of significant size in
their chosen sector of operation.  This has only
happened since the takeover of Ansett, and at current
share prices you could be forgiven for thinking that
the sharemarket has completely discounted their move.

The Air NZ share price suffered when it was revealed
that most of their hedging on fuel expired at the end
of 2000.  Of course since this time the fuel price has
moved down and the $NZ-$US exchange rate has moved up,
so it may be that not hedging at 3rd quarter 2000 high
prices and low exchange rates will be seen in hindsight
as a good move.   Both the AIRVA and AIVB shares are
trading at very modest prices, and with last year's
capital raising completed  I can't see too much
downside from here.

There are three problems I see with the 'A' shares. 
The first is that only New Zealanders can buy them, and
with the way the laws of supply and demand work I can't
see huge local demand pushing the price up.  There is a
potential overhang in the market of A shares if
Brierley Investments decide to quit their stake (now
all A shares).  There is a potential future dilution of
A shares some years down the track if the mooted
capital notes issue goes ahead (these will eventually
covert to A shares).

But if I were investing for income, I wouldn't be in
any hurry to sell my AIRVA shares at current price
levels.  Just don't expect any spectacular capital
gains for 2-3 years until that Ansett purchase is fully
bedded down.   (All comments IMHO of course) SNOOPY


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