Air New Zealand has proposed that shareholders reinvest their dividends for philanthropic endeavours as part of its sustainability aims but the concept won't be foisted on its biggest shareholder, the Crown, which is urging state-owned businesses to maximise payouts.
The Auckland-based airline is planning to offer retail shareholders a "gividend" next year as part of a sustainability push, letting them reinvest their dividend payments into organisations which address social and environmental challenges. The gividend proposal was a post-script to Air NZ's first-ever sustainability report, launched last week, which also includes reducing the airline's carbon footprint by switching to an electric ground fleet by 2017.
Retail investors are typically mums and dads who own smaller parcels of shares. According to the airline's 2014 annual report 94.4 per cent of its 24,880 shareholders held parcels of 10,000 shares or less. Collectively, those shareholders owned about 2.4 per cent of the company, meaning they got about $5.3 million of the total $221.8 million dividends that year, which included a special dividend of 10c a share.
Air New Zealand paid $179.4 million in dividends in the 2015 financial year, although the 2015 annual report with the latest shareholder figures hasn't been released yet.
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Based on last year's numbers, about $4.31 million in dividends would be available for reinvestment from smaller shareholders.
However, the National-led government, which booked $93 million in 2015 dividend payments from its 51.95 per cent stake in the airline, is more focused on receiving regular payments to help balance its books, and wouldn't be a likely participant even if the offer was open to it.
"The Treasury's advice is there would be no expectation for the Crown to participate," said Chris Ritchie, an official in Finance Minister Bill English's office. The Government "doesn't hypothecate revenues", he said, referring to the practice of allocating revenue from a specific tax to a particular expense.
"Crown revenues, including that from dividends, are directed into the consolidated accounts of the Crown and any decisions on supporting social, economic or environmental programmes are made independently," Ritchie said.
Central government's push for dividends from its state-owned enterprises was highlighted last month when Landcorp Farming said it wouldn't pay a dividend this year, while at the same time taking on debt to convert forestry land into dairy farms.