AIR - Air NZ.

[FTG]

Ah yes, correct LaserEye. The plot thickens huh....

"here goes some more taxpayers money folks", no need to do a CR for now". "By the way, we will write an open letter and gently remind you of your position, remembering that our ideological position is that the national Airline actually should really be owned & controlled by the State anyway"

Under Labour is re-nationalizing AIR inevitable?

[kyanar]

you all seem to be missing the major good news in todays announcement - interest rate on government loan has been significantly reduced:


- New lower interest rate of 3.5% (down from 8%) for the first tranche of $1 Billion (increased from $600 million)
- New lower interest rate of 5% (down from 9%) for the second tranche of $500 million (increased from $300 million)

The government, given it has access to near infinite funds at ridiculously low rates through RBNZ's bond buying, must be making a tidy profit from gouging AIR NZ, which cannot refuse the loan from its major shareholder. One wonders if this thing is even legal. Surely negatively impacted shareholders would have grounds to file a shareholder lawsuit against the company for breach of fiduciary duty?

[bull....]

The government, given it has access to near infinite funds at ridiculously low rates through RBNZ's bond buying, must be making a tidy profit from gouging AIR NZ, which cannot refuse the loan from its major shareholder. One wonders if this thing is even legal. Surely negatively impacted shareholders would have grounds to file a shareholder lawsuit against the company for breach of fiduciary duty?

taken one from buffets playbook on giving loans to distressed companies at very high rates

[winner69]

The government, given it has access to near infinite funds at ridiculously low rates through RBNZ's bond buying, must be making a tidy profit from gouging AIR NZ, which cannot refuse the loan from its major shareholder. One wonders if this thing is even legal. Surely negatively impacted shareholders would have grounds to file a shareholder lawsuit against the company for breach of fiduciary duty?

All negotiated on an arms’ length basis and each party has been independently advised so all above board

Distressed companies always ‘pay’ top dollar (high interest rates) to stay afloat - and generally not in a good negotiating position.

Shareholders still have a company ....lucky aren’t they - they could have lost the lot without a bail out.

[traineeinvestor]

The assumption implicit in the government loan is that AIR could not raise the money elsewhere without paying higher interest rates or agreeing to more problematic covenants (especially debt servicing). If my assumption is correct, I don't have a problem with taking the loan on the terms they did. Other airlines have done similar deals and it's worth bearing in mind that if customers worry about an airline's financial ability to keep flying they won't part with their hard earned and heavily taxed cash.

That said, the blunt reality is I find it hard to see a way out of their current position without a significant capital raise unless the government opens the border to quarantine free travellers from other low risk countries such as Taiwan, Singapore and Hong Kong and does so very promptly (which I consider unlikely). Even that probably wouldn't be enough.

Disclosure: wouldn't touch it with a barge pole long enough to pole vault Cook Strait.

[Waltzing]

Certainly which shareholders would precede with a case against the Air Line as the GOVT holds such a large percentage.

who has the money to bring the case.

This situation is very very good for the tax payer and hopeless for traders.

Pitty as it would be a buy after the cap raise and surely a good bit of price discovery.

The government could keep this going for a while, perhaps years.

The dividend when it comes will be far reduced because the leveraged balance sheet to the government.

The govt hold the largest portion of share and could hold the largest portion of debt? Havnt run the numbers , some for Inspector Snoop to go over.

Govt loan repayments are from cap raise but that is surely just give the message that they want you to invest.

Roll out the WW1 add, Your Country Needs you buy AIR Cap Raise.

[Jaa]

Air NZ expects the Tasman to return to 80-90% of pre-COVID capacity. That will be enough for the airline to breakeven on a cash basis. If it goes to 150% of capacity as it easily could with no Virgin/Emirates/Others etc then expect the airline to be solidly profitable. Tasman fliers will also take domestic flights so expect domestic load factors to increase too. Also a bit more capacity for international arrivals.

Reduced more realistic interest rates help too and the air freight support scheme has been extended to October.

Looks like their plan of playing for time is working out well. Well done to management.

[Habits]

Why would anyone own this share at these prices? Am I missing something?

Its funny, Morningstar have AIR as undervalued along with ATM

[Zaphod]

Air NZ expects the Tasman to return to 80-90% of pre-COVID capacity. That will be enough for the airline to breakeven on a cash basis. If it goes to 150% of capacity as it easily could with no Virgin/Emirates/Others etc then expect the airline to be solidly profitable. Tasman fliers will also take domestic flights so expect domestic load factors to increase too. Also a bit more capacity for international arrivals.

That would also depend on how many times the tap is turned off due to an outbreak in one of the bubble countries/states. I think their projections are overly optimistic at this point, unless the projection horizon is a single day.

[Dlownz]

Fran O'Sullivan: Grant Robertson tightens Government's grip on Air New Zealand
https://www.nzherald.co.nz/business/...ectid=12434610
Again this is premium. But I've never owned Air as Ive always thought as overpriced and a tip I was once told was never own a airline.
But this kinda tells me the government want them to sacrifice profit for the good of the country. I don't see how air nz can proceed as overly profitable with the government putting there claws in