No clear skies for Air NZ

By Phil Boeyen, ShareChat Business News Editor

Wednesday 19th September 2001

Air New Zealand (NZSE: AIRVA) is continuing to struggle with the combination of Ansett's demise and the wider global outlook despite some further improvement in its share price Wednesday.

The company has revealed it lost $26.3 million in July and August trading, excluding Ansett. The figure compares to a loss of $23.1 million, excluding Ansett, for the same period last year.

Air NZ says the first quarter of the financial year is normally a 'low' period due to seasonal patterns and the outlook for the rest of the year is currently being determined.

However it says future profitability will be negatively affected by the fallout from last week's US terrorist attacks and global economic conditions.

Other factors are the loss of feeder traffic onto Air New Zealand services from Ansett Australia, groundings of Air New Zealand aircraft in Australia as a result of industrial action and any legal obligations to Ansett which may arise.

"As a result of the above events, significant uncertainty exists around the trading performance of Air New Zealand's operations in the short term," the company says.

"Over the next few weeks Air New Zealand will continue to formulate its business plan which will take into account the above factors and will be subject to due diligence by key stakeholders including the major shareholders, the New Zealand government and banks as part of the recapitalisation process previously announced."

Although the future capital structure of the airline was apparently decided last week that could well change in light of recent events.

Under the original plan major shareholders Brierley Investment and Singapore Airlines were due to put in an extra $150 million each for a greater shareholding, with the NZ government providing a credit line of up to $550 million.

However as the receivers pore over Ansett's accounts and Air NZ's liabilities in relation to the airline's collapse there are concerns that the package will not be enough.

Some commentators are calling for Air New Zealand to be put under voluntary management to prevent assets being seized to pay Ansett debts but this move has not yet been made.

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