AIR - Air NZ.

[Beagle]

I'm not sure where you are coming from Raz ? How did AIR get lucky ? Other airlines with a material stake have their representatives on the board.
Its been clear for about a year C.L. is not happy with the financial performance of VAH and that's only what's been said in public...
Happy for you to unpack your point of view more but luck doesn't seem to have much to do with it from what I can see. The way I see it C.L. has made a bold call that VAH has serious systemic issues and he's very unhappy with the way the CEO is managing the company.

Even if AIR just tagged along for the ride and propped VAH up some more what guarantee would they have that they'd get an acceptable commercial return on a say a further $A300m equity injection, (that's just their share) to get VAH's gearing down to 67% ? That C.L. undoubtedly backed by the AIR board made the call that enough is enough is a good sign in my opinion that they are prepared to act decisively to extricate themselves from this company and clean up this mess with the minimum possible damage, before it gets any worse. I'm not too fussed one way or the other with the special divvy although it would be nice in due course if it happens, but sending huge sum's of AIR's money to prop up an Australian company that seems both leadership challenged and riddled with systemic issues...that would be a very bad idea in my opinion and one I'm pleased they've emphatically rejected.

[kiora]

Interesting
https://nz.finance.yahoo.com/news/al...124810628.html

[Raz]

I'm not sure where you are coming from Raz ? How did AIR get lucky ? Other airlines with a material stake have their representatives on the board.
Its been clear for about a year C.L. is not happy with the financial performance of VAH and that's only what's been said in public...
Happy for you to unpack your point of view more but luck doesn't seem to have much to do with it from what I can see. The way I see it C.L. has made a bold call that VAH has serious systemic issues and he's very unhappy with the way the CEO is managing the company.

Even if AIR just tagged along for the ride and propped VAH up some more what guarantee would they have that they'd get an acceptable commercial return on a say a further $A300m equity injection, (that's just their share) to get VAH's gearing down to 67% ? That C.L. undoubtedly backed by the AIR board made the call that enough is enough is a good sign in my opinion that they are prepared to act decisively to extricate themselves from this company and clean up this mess with the minimum possible damage, before it gets any worse. I'm not too fussed one way or the other with the special divvy although it would be nice in due course if it happens, but sending huge sum's of AIR's money to prop up an Australian company that seems both leadership challenged and riddled with systemic issues...that would be a very bad idea in my opinion and one I'm pleased they've emphatically rejected.

The luck is management depending on a larger airline to come along and buy their stake as a strategic position at this moment. I think they have got their timing wrong on this, should have happened earlier. The financial exposure is less material to the other strategic partners in VAH unlike AIR so their perspective may well be different as a consequence. It is a limited market out there and if true others are keen to offload, they will have already chatted to possibles in the market. Just weakens AIR negotiating position further.

[Raz]

Interesting
https://nz.finance.yahoo.com/news/al...124810628.html

Air Alaska is a very well run airline, great service even on its budget routes, if they go full international they will be a presence.

[dobby41]

Interesting
https://nz.finance.yahoo.com/news/al...124810628.html

47% premium is huge.

[winner69]

47% premium is huge.

As I said the other day - Never underestimate how much 'strategic value' is worth, no matter how the financials look

[percy]

I think we often do not realise the value of "gates"/ "slots" at some airports.
I would think in Australia, they would be of considerable value at Sydney and Melbourne airports.

[Beagle]

Well being timely is more important..how long was he on the Board...around 18 months, he new what was happening and they they will get out of this investment through good lucky not good management obviously. Happy to be out for now, never rely on luck to make an investment work. If you get a special dividend then thats great however it will be based on luck.

The most important thing as far as I am concerned is that AIR have drawn a line in the sand as said to Borghetti, you will not get a single dollar more of AIR's money. VAH have already sucked about $A400m out of AIR and 5-6 years is more than enough time to prove the business model is successful and it isn't. When you've got bad cards the worst thing you can do is double down on a losing hand. C.L. is obviously familiar with the Kenny Rogers song and knows the hand Rob Fyfe organised isn't strong. Enjoy what would possibly make a good theme song at this year's annual meeting. https://www.youtube.com/watch?v=kn481KcjvMo If they take a $100m haircut so be it, not much in the context of a $900-$1,000m operating profit before tax this year and avoids VAH leeching hundreds of millions of dollars of them in the years ahead. Lets be honest, VAH is a pup...someone had to say it and its good C.L. isn't scared of making the bold calls and augers well for his capabilities as a leader going forward.

In my view the business model of Virgin is systemically flawed. They are trying to be all things to all customers through their various product offers and are weighed down by massive royalties to Sir Richard Branson for the use of the name Virgin. Him, senior management and senior pilots are the only ones making any decent money out of the airline.

[Sideshow Bob]

47% premium is huge.

Flew a number of American airlines last year. Virgin USA were excellent, especially for American airlines (and also had a safety video very similar to Men In Black, prior to this being launched) Alaska also above average. Together could be quite a force if can merge effectively.

[Beagle]

Normalised the size of my holding today as I don't see any point in mucking about and don't want to be caught short when the market reacts positively to the announcement of AIR's exit from VAH and at the same time announces a large on market buy-back and fully imputed special dividend

The market is obviously relieved that VAH will no longer be a leech sucking AIR's blood and AIR will have a nice unencumbered flight path going forward.