Forum Archive Index - September 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

Malcolm,

The feeder lines to the US and for that matter to all international Airports will "need to be secured".

 

Any Airport being too lax in security matters, could get ticked off from now on and I would guess that in time, planes leaving from such an Airport would have a difficult job landing in the US or anywhere else.

 

One would hope that some international unit would inspect security and rate the airports accordingly. They could be issued with a red card if they did not conform.

 

The problem is that costs immediately increase and an Airport will try to recover these costs from the Carrier and/ public.

Sydney has / is about to have a fee which includes all costs incurred by the Airport in supplying all amenities, including security, to the public. These fees will rise.

 

As to costs: Refer to my previous post which devotes one web site to the banning of stowed personal luggage on US passenger planes.

 

From now on, these killers will look for reprisals as soon as some of them get hit by the US and Allies.( European oil lines/ refineries and perhaps even atomic powerstations could also be on their " must do " list.)   

 

Rest assured that the cost of flying will increase as a consequence of security measures ( Include higher insurance costs ); airline companies will be bankrupted and clearance of passengers will be slower, particularly in the US.

 

As to AIA, we already have a problem with AIR not being able to fly passengers to Australia, eg. Sydney Airport. Presumably, they can fly with the winner, Qantas.

 

Tourism numbers which were increasing nicely, could be affected, I think. This, with reference to the US and shrinking economies.

 

The question is, how much of this is already in the share price. AIA was $3.90 before the Ansett debacle and fell to $ 3.35, a fall of some 15%.

 

( I think that price would have reached $4 and that a full takeover value could have been in the range $ 4.80- $ 5.20. I did'nt expect Buffett to pay that much but he would not want it anyway. Somebody else would and is getting closer to that objective).     

 

I am not sure if the tenders for the Sydney Airport trade sale were in before the attack in the US; if so and are recognized as valid, then the successful tenderer may have paid more perhaps than warranted. However, AIA was not overtly valued internationally, I believe.

 

Higher oil prices and higher travelling costs could mean a lesser increase in tourist numbers but it can't be quantified.

It is possible that for a period, there could be a decrease in tourists particularly from the US. Unless, more people think that NZ is a safer place and come here!     

 

It will take some time before we arrive at some equilibrium and the true value of AIA can be appreciated again.

 

Gerry

Holds AIA