Forum Archive Index - April 2001

[Greg <g&jelliott@xtra.co.nz>]

Further to today's posts on Air NZ, Qantas NZ and the airports; this is an
interesting time for aviation in NZ. But I don't think there'll be a gap for
long. Some thoughts and observations...

Ansett started in 1986, didn't post their first profit until 1995, trebled
this in 1996, but then ran into problems with the pilots dispute, which
really stuffed their image and customer loyalty, resulting in a major
restructure and further losses until 2000, when they were bought by the
Tasman Pacific consortium for $36.5m and rebranded to Qantas NZ in a
franchise arrangement. (NB Qantas Aust has no financial stake in Qantas NZ,
but has an interest in linking international sectors with the NZ main trunk
feeders). Like Air NZ, Qantas NZ have struggled to cope with the low dollar
and high fuel costs and have accumulated massive debts - over $700,000 with
Wellington airport.

The domestic money has always been in the main trunk centres (WN, CH, AA,
QN) both for business and international links. I suspect Air NZ took the
bulk of business customers through the pilots dispute, and its been downhill
for Ansett/Qantas NZ ever since. Air NZ have also had the advantage of
offering international links. Though its a competitive market, there is
probably still a viable opportunity here for an international competitor
(Qantas Aust, Virgin?) to buy in to Qantas NZ's existing facilities cheap,
and compete on the main trunks with links to their international services.

Qantas NZ has few assets - mostly leased aircraft and terminal facilities,
but offers overseas competitors a valuable entry to the NZ domestic market,
if allied with international sectors.

I suspect a buyer will jump in very quickly (weeks rather than months) but
perhaps operate a slightly leaner service. There will be no let up for Air
NZ in the longer term.

The airports are not likely to suffer long term, although there may be some
losses to write off short term - suspect Qantas NZ don't have the cash to
cover their debts.

As for Air NZ, their strategy (and profit) are in the trans-Tasman and
international sectors, not on the domestic scene. I don't think they'll hike
prices significantly over so short a term. And I believe they'll work
through the present crisis with Ansett Aust for the better (but then I'm an
optimist, and that's another story).

Disc - hold AIRVB, (and wish I'd bought some more last week!).

Greg Elliott

> From: "Deidre Gunn" <deidre.gunn@clear.net.nz>
> Reply-To: sharechat@sharechat.co.nz
> Date: Sun, 22 Apr 2001 21:12:45 +1200
> To: <sharechat@sharechat.co.nz>
> Subject: [sharechat] Qantas Effect on Airports
> 
> 
> I'm interested in the effects on the airport stocks such as Infratil (who
> own Wellington Airport) and AIA now that Qantas NZ, or should I say Tasman
> Pacific Airlines, have gone into receivership.
> 
> I would expect that the airports are owed money and, until a replacement
> Airline arrives, I would expect the airports revenue will be reduced due to
> lack of rentals etc.
> 
> Without a competing airline, I guess we can all say goodbye to cheep
> airfares. This will surely reduce the number of non-business domestic
> travellers especially as a lot of us could drive to our destinations.
> 
> Once the backlog of travellers is cleared, I would guess that the number of
> flights will be reduced. Air NZ & Origan Pacific's domestic flight numbers
> will probably be increased but wouldn't think it would total as many flights
> as pre-receivership levels.
> 
> This is good news for Air NZ and Origan Pacific, but if these scenarios are
> true, I would expect there to be some impact on the airports. What do others
> think?
> 
> 
> Deidre 
> 
> Disc: Own a few AIRVA. Don't own any Airport shares.
> 


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