Forum Archive Index - December 2002

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

Hi ichi

>> 
>>the bailing out was not done for Air New Zealand's 
>>sake. 
> 
>So what?  It's a tough world out there.  Lots of things
>can block your precious air corridor:  industrial action,
>bad weather
>

Those two can be anticipated, and would be on any competent business 
manager's horizon.

>
>
>earthquake, 
>
>

Unlikely to hobble all airports all over the country, at the same 
time.

>
>
>terrorism.  
>
>

The airports are taking preventative measures in anticipation of 
that.

I think it is reasonable that when a market player fails there will 
be sufficient other players to take up the slack.  If Air NZ had gone 
into receivership, the receivers prime duty would have been to 
protect the interest of existing creditors.  Don't get me wrong, I'm 
not criticizing any potential receivers for carrying out such a 
statutory duty.

But handing Air NZ to the receivers would have meant that the 
existing creditors be ranked ahead of future exporters.  That result 
would have been unacceptable for NZ, so clearly the government was 
right to step in IMHO.

>
> 
>It's unlikely that the planes would be grounded for long.
>The receiver would no doubt keep them flying and/or
>competitors would move in to fill the gap.
>
>

You can't assume that.  In the wake of September 11th, it would 
probably have been in creditors interests to shut down the 
international air arm entirely.


>
> 
>Before the arrival of Ansett, our domestic
>airline (headquartered in New Zealand) charged high fares
>and provided poor service.  Did that really "best serve the
>interests of New Zealanders"?
>
>

You mean they only served tea and biscuits, ran on time to a 
timetable, and ran 737s on the main trunk routes?  In other words 
twelve years of privatisation has lead Air New Zealand to the 
conclusion that the government, owners of the old NAC, were exactly 
right all along!

>
> 
>  Or are you suggesting that Air NZ act like 
>the Department of Tourism and Publicity?
>
>
>

Actually I believe the government does see Air New Zealand jets as  
flying billboards, yes.

>
> 
>>Would you expect 'your' government to look after 'your' 
>>'home market' first, or favour advancing the interests 
>>of foreign nationals in other countries instead?
> 
>I would expect my government to get out of the way and 
>let businesses get on with it.  
> 
>

Your assumptions are so far from the airline industry's state of 
reality, it is hard to see how you can come to sensible conclusion on 
the subject.

Singapore Airlines is a partially privatised entity, controlled by 
the Singaporean Government.  It is not a fully private business.  
The Singaporean government 'getting out of it' is not on the agenda.

Do you understand the difference between a company like that verses a 
fully 'private' company taking an interest in Air New Zealand?

>
>
>>The best option would have been not to buy Ansett, at 
>>least the last 50% of it, at all.  
> 
>A good option, but not necessarily the best.  Full
>deregulation may have been the best option.
>
>

Possibly, but given that the airline industry is not fully 
deregulated, this is a 'straw man' option.

>
> 
>> But with hindsight that is an easy thing to say.
> 
>It isn't hindsight.  At the time of the deal, lots of
>people (including myself) were dead set against the deal.
> 
>

Maybe, but the failure of the Air NZ/Ansett marriage was not 
guaranteed.  Given lower fuel prices and no September 11th and 
pre-emptive action by Ansett on the maintenance issues the result 
might have been different.

>
>
>>a cash investment by the NZ government was the only 
>>way to go, once the crisis point had been reached.  
> 
>The only reason we reached crisis point was because of
>government interference and dithering.  
>
>

The fact that the government was not going to fast track the revision 
of the airline ownership rules should have been obvious.  You cannot 
call yourself a 'good manager' if you just assume that the government 
will flatten any hurdles in your business plan.  The lack of 
anticipation of the movement of the government on policy, I would 
class as a failure of management.

>
> 
>>I didn't see your hand going up volunteering to put 
>>$NZ1bn in yourself 
> 
> Of course not.  That would have been a big mistake.
> Good money after bad, and all that sort of thing.
>
> 


Thanks for proving the point.  You as a rational experienced investor 
would not put the money into Air New Zealand, yet you assume that the 
equally hard nosed Singapore Airlines would have done so.  Admit it 
now.  With a little more sniffing around the Air NZ books that SIA 
cash injection was never going to happen was it?

SNOOPY



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