Air NZ asset sale will be more successful - analyst

Air New Zealand's share sell-down may come at a slight discount, an analyst predicts. Photo / NZ Herald

The Government's Air New Zealand share sell-down is likely to be priced at a small discount to its share price because of the demand for it, says an analyst.

William Curtayne, a fund manager at Milford Asset Management, said the deal could be priced at around $1.60 per share - a 4 per cent discount to last night's $1.67 closing price.

"It's likely to get reasonable demand from New Zealand institutions," he said.

Curtayne also expected there to be off-shore interest in the company, particularly from Australian institutional investors given Air New Zealand's strong performance compare to rival airline Qantas.

Curtayne predicted the Air New Zealand share sell-down would do better than the Meridian Energy and Mighty River Power floats because the company was a growth business and both New Zealand and the global economy were heading into a period of growth.

"It's a cyclical asset in the right place in its cycle."

However, he said Air New Zealand was also highly risky as its performance could be impacted by a variety of factors including oil prices, currency changes and capacity issues caused by competing airlines.