Forum Archive Index - May 2001

["Peter Maiden" <pmaiden@xtra.co.nz>]

Recent posts on airlines have most readable and  very interesting.

 

My general impression from the posts is that there is an strong underlying admiration for the way that Air New Zealand operates - especially in difficult circumstances.

 

However Air New Zealand remains off my watch list at the moment.

 

For no other reason that since July 1999 those at Air New Zealand in charge of shareholder wealth have cost shareholders $1.32b since July 1999.

 

I have calculated this as follows

 

Fall in market capitalisation from July 1999 to now ( $1,966M to $999M)...................$967M

Add expected risk free return on market cap at year beginnings....................................$185M

Add amount paid by shareholders because of rights issue..............................................$284M

Less dividends paid ( full year 2000 and half year 2001)...............................................$115M

 

TOTAL DECLINE IN SHAREHOLDER WEALTH OVER LAST 22 MONTHS     $1,321M

 

As the market capitalisation of Air New Zealand at July 1999 was $1,966M means that 67% of what shareholder wealth there was in Air New Zealand has gone over the last 22 months

 

 

As I said before a trend in motion tends to stay in motion - I'd only be interested in having another look at Air New Zealand when the trend is heading upwards. Maybe the bottom has been reached but reading the press over the last few days it appears that Air New Zealnd will be under expreme pressure to maintain market share and return the business to proftability in the short to medium term.

 

Cheers

 

Peter