The government is selling down their shareholding in Air New Zealand (AIR) and I think this is a great idea. Not because I am a great fan of assets sales, but if I owned 75% of Air New Zealand, I would sell and take profits as well.
AIR has sold on the market over the past 12 months between $ 1.02 and $1.54. The sell down is at $1.60 or better. AIR has performed really well over the past couple of years and has increased revenue by 3.6% and reduced costs by 3%. The problem I have with AIR is their debt level is around 67% and they are in a business that is very competitive and fuel price sensitive. You only need look at the research for 2009 to see the negative impact on cash flow from strong fuel prices and falling passenger numbers.
As tax payers we bailed out AIR when they needed it, now let’s take the profit when it’s on the table.
John Barber