AIR NZ share rise queried

By NZPA

Tuesday 4th June 2002

Pressure is mounting on the New Zealand Stock Exchange to issue a "please explain" note to Air New Zealand on its recent share price surge.

Brokers said this morning that insider trading on information about Qantas, which last week said it had held talks with Air NZ on acquiring a stake in the national carrier, was the likely reason behind the share price rise.

Air NZ shares have rocketed more than 40 percent since early May and this morning struck a fresh high of 76 cents. By 11am they were two cents higher at 73 cents.

Macquarie Bank senior equity analyst Arthur Lim said the climbing stock suggested insider trading.

"How else do you explain the continuing surge in share price," Mr Lim said.

Forsyth Barr research manager Rob Mercer said last week Air NZ's current share price was unsustainable.

"I don't think there's a lot of fundamental support for the current share price.

"The level of profitability it has to return to is one it hasn't been able to achieve in the past."

Forsyth Barr has forecast a $99 million profit for Air NZ in 2003 and $138 million in 2004, above the airline's own forecast earlier this year.

Forsyth Barr valued the shares about 30 cents, which took earnings volatility and risks into account.

A member of the NZSE market control section, Martin Rea, said that while no request had arrived for the exchange to issue a "please explain" note to Air NZ, it could still be done.

"We can certainly do things in hindsight," Mr Rea said.

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