----- Original Message -----
Sent: Wednesday, February 21, 2001
11:14 PM
Subject: Re: [sharechat] AIRVA
Michael,
I am not too keen on the word
"experienced" investor but like Hugh Webber, don't like
airlines.
All over the world they tend to have very
erratic earnings. And I don't like
AIR ( Air New
Zealand ) because of Brierly
involvement!
Unlike other airlines they did not
hedge the oil price when it was so low @ $US 10-20 !
They now have a new CEO, he may be able to
do something but there are heavy costs.
I thought that they had paid too much for
Ansett and it is becoming clearer, that they did so !
Another one - in my opinion - is 'the
Aussie factor':They tend to be far more parochial and hate their
companies to be owned by foreigners.( Some Aussies will disagree with
this thought. )
Therefore, I feel that the ticket price has to
be lower than that of Qantas before they would use another
airline.
As you know there were problems with Ansett
planes due to poor maintenance. That is not normally the case.
It may indicate that there
were management problems as well.
In my opinion, they could be running close to - or even at a loss for
some time.
You need to check as to the ownership of planes. Normally, they would
lease some as well.
If they own quite a few, then depreciation charges will be high.(
Most likely they will tend to lease more when there is little cash
flow ).
I have indicated in Forum that their debt
levels tend to be high. They " fix "
this with a cash issue coupled with some more borrowing.
AIR will most likely need
refinancing.
Their covenant with their Bank(s) may
prescribe refinancing should the share price fall below a certain
level.
Another cash isue is not likely as the price of
new stock will need to be set too low to be acceptable.
In any case, the market will not accept another
so soon after the last one!
I think that right now
AIR will be approaching the Government
and arrange
for Singapore to take an increased stake in
AIR.
Singapore could dictate any terms !!
I don't think that I would hold AIR
in these conditions.
I could be wrong but in your case
I would sell as soon
as the exchange
opens!!
Had you written a few days ago, then
I would have recommended a switch to AIA !
I own stock and still like it; it
rose today; unfortunately for you, the interim announcement
could be imminent! You may have to move quickly if you want
to buy any!!
Note that if Singapore gets control of -
or a large stake in - Air New Zealand ( AIR ), this
will immediately raise the share price of Auckland Airport ( AIA) !
I think that the investor with
some foresight may already have started buying in
AIA!
Gerry
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