Liam Dann on business

Business editor of the New Zealand Herald, Liam Dann, discusses New Zealand and international financial matters

Liam Dann: Don't lump Air NZ with the rest

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Air New Zealand is a private company now - anyone can buy shares in it.
Air New Zealand is a private company now - anyone can buy shares in it.

The sale of the Government's Air New Zealand shares shouldn't be lumped in with the political scrap over the sale of state owned enterprises (SOEs) as it has been by opposition parties.

Air New Zealand is already a private company. It is publicly listed which means anyone can buy shares and the company must abide by NZX market regulations around disclosure.

Air New Zealand, in its current form, was never a state owned enterprise. The Government investment was a bailout which came about of necessity when the company went to the brink of collapse in 2001.

However much you feel the blame for that failure can be attributed to its private ownership structure at the time, that structure is not being copied here.

This is not, as the opposition says, history repeating.

Today we own a 73 per cent stake by the end of tomorrow we'll own 53 per cent. So what? The numerical change doesn't alter the control that Government has as majority shareholder.

It is true that the stable ownership structure has been an asset for the airline during volatile times, enabling it to make good long term decisions. But then, it is not like the company has needed any direction or assistance from the Government for the last decade. It has been well managed and made the right commercial decisions to get through the global financial crisis in good shape.

The taxpayer has done well from the investment - but when you look around the world at the performance of airlines you'd have to say this is a rare bonus..

Air New Zealand will keep doing what it is doing. Which is working hard to make as much money as it can while ensuring it has a sustainable long term future.

Claims that the airline may now charge higher prices and neglect regional routes are ludicrous. They are both insulting to the current management and likely to raise a wry smile from the regions - many of which already believe they are underserved and overcharged by Air New Zealand's unashamedly commercial model.

Meanwhile the referendum and debate about the sale of state owned enterprises such as Meridian, Mighty River and Genesis - will, and should , rage on.

The sale process for the first two power companies has not gone well. The fiscal case for selling and forgoing the dividends that these assets return is marginal. The case for using the sale to bolster local capital markets and improve local investment rates has been sadly undermined by the poor performance of the stocks. The plunging prices of Meridian and Mighty River are making them vulnerable to savvy foreign funds with long term outlooks.

There is strong case for the Government to think again about the sale of Genesis. But selling down Air New Zealand was a no brainer.

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