Singapore Airlines leery of bleeding Air NZ

By Phil Boeyen, ShareChat Business News Editor

Friday 7th September 2001

Air New Zealand (NZSE: AIRVA) has confirmed it is losing A$1.3 million a day at its Ansett subsidiary and reported that Singapore Airlines is no longer prepared to pay $1.31 per share to increase its holding

The company says Singapore Airlines told the board at a meeting yesterday that it could not commit to a price of $1.31 per share. SIA already owns 25% of Air NZ via the carrier's B shares, which have taken a hammering this week, closing Friday at 81 cents.

Air NZ says following yesterday's meeting its board has asked advisors to submit a commercial refinancing package. The board will be having discussions with the major shareholders and the New Zealand government and will report back at the beginning of next week.

Despite Singapore Airlines refusal to stump up with the previously flagged price, Air NZ claims its wealthy shareholder remains interested in taking a greater holding.

"The pricing of any equity issued as part of the financial support under discussion remains to be resolved in that context," Air New Zealand says.

All eyes will now be on next Thursday's financial report, with indications it could well be worse than the market has already predicted.

Air NZ says in the months since it began discussions with the government at the start of June competition in the Australian market has continued to be intense from both Qantas and Virgin Blue.

"There has been considerable public comment on the impact competition has had and continues to have on Ansett's profitability. Losses in Ansett currently amount to approximately A$1.3 million per day at an earnings before interest and tax level."

The company says the carrying value of Ansett in Air New Zealand's balance sheet remains under discussion with the its auditors.

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