AIR - Air NZ.

[thestg]

Major Shareholders Provide Loan Facility to Virgin Australi

10:47am, 21 Mar 2016 | GENERAL

Air New Zealand advises that it has agreed to support Virgin Australia Holdings Limited (Virgin Australia or the Company) by providing a new unsecured term loan facility.

Air New Zealand (NZX: AIR), Etihad Airways, Singapore Airlines (SGX: SIA) and Virgin Group will each separately provide funding via of a new loan facility to Virgin Australia. This is an initial step in strengthening Virgin Australia’s liquidity while the Company commences a review of its capital structure. The review will include an assessment of the appropriate mix of debt and equity capital and operational initiatives to enhance Virgin Australia’s cash flow and profitability.
The facilities are for an aggregate amount of AUD425 million with pro rata participation from each shareholder based on their relevant interest. The facilities are for a term of 12 months and are based on arm’s length commercial terms.
Air New Zealand’s portion of the loan facility to be funded to Virgin Australia is AUD131.2 million (approximately NZD146.5 million).
Virgin Investments Limited will provide the loan facility. Virgin Group’s shareholding in the Virgin Australia Group is held by Corvina Holdings Limited.
Ends

[Beagle]

First impressions. I'm not too pleased with this. IF VAH isn't already making good money when the fuel costs are so low why not ? The fact that they say its an initial step...suggests further investment is required

On the other hand its good that they're looking at operational initiatives to enhance cash flow and profitability and I suspect that review will be very thorough. Maybe VAH's CEO needs to step down if he can't cut the mustard and regularly needs external shareholders assistance ? Note AIR increased their investment in VAH in 2014. How much more will be required and maybe this is what's behind Friday's SP plunge ? Return on AIR's investment to date has been very poor and memory of Ansett fiasco lingers and I suspect in some people's minds remains the default setting until proven otherwise. Sometimes in a quieter moment I wonder about this whole VAH investment strategy... Sorry folks...more questions than answers from me on the VAH matter. I suppose we can take some comfort from Chris Luxon being on the board. P.S. VAH is also well served with very good intellectual horsepower from key representatives of its other airline shareholders.

[Hoop]

12.5% drop in share price for Virgin, right on 5 pm local time Friday 18 March. Over 5 million shares traded, much higher than usual. No apparent reason for this drop, and nothing in the Media or on Hotcopper. Seems strange given the stunning positive results released just a week ago. The only negative in the results was the lack of guidance for the coming year. But 12.5% drop in one day???

It will be interesting to see if this has any effect on the AirNZ share price on Monday, given they own 26% of VAH.

Hmmm....Announcement released at 10.47am Monday NZT

Air New Zealand (NZX: AIR), Etihad Airways, Singapore Airlines (SGX: SIA) and

Virgin Group will each separately provide funding via of a new loan facility

to Virgin Australia. This is an initial step in strengthening Virgin

Australia's liquidity while the Company commences a review of its capital

structure. The review will include an assessment of the appropriate mix of

debt and equity capital and operational initiatives to enhance Virgin

Australia's cash flow and profitability.

MR Market sees nothing sinister in this announcement as AIR is still up 2c this morning.....

No announcement yet on the ASX so was VAH Friday's 12.5% drop a result of insider trading..

[Beagle]

And now we are seeing the SP come under some pressure from this announcement...what a surprise...(NOT) Disc I let some freight off at $2.86..will look to reload later.

VAH set to open at 38.5 cps, up 10% so at least the Australian market sees this as a positive for VAH. Although this is a loan not further capital at this stage, the requirement for possible further capital is clearly hinted at in the news release so I'd like to see the operational review of VAH be radical and far reaching. Really their level of profitability when oil is so low is woefully inadequate for the amount of shareholders funds already involved. I am pretty sure the other shareholders in VAH would agree with that viewpoint.

[thestg]

Same here - sold 40% of my holdings @ $2.84 also with the intention to reload later.

[777]

Looks like VAH will open back up at 38.5c.

[skid]

My wife often complains its too hot or too cold and I'm usually feeling the exact opposite in exactly the same environment...just saying.

if you had been on the fight I was on i think you would not say that--It was literally like sitting outside on an unsettled winter day----I think it is far more likely that they couldnt get a consistent temperature throughout the plane----just as a sidebar ,Ive never had that problem on any other flights on different carriers.--Is the AK-Vancouver route the last of the older planes?(My wife is not the kind who shy's away from diplomatically trying to sort those kind of things out,but I dont know all the details)

Ive had some pretty uncomfortable waits at some airports though.

funny enough ,my worst experience was on a bus in the tropics(Cambodia)..thought I was going to get Pneumonia!

[777]

The oldest of 777-200s are only just over 10 years old. Hardly old in aircraft terms.

[Beagle]

Skid - Maybe bleating like a lamb lost from its mother would have seen her shifted to another part of the aircraft...maybe even upgraded ? Agree with 777 on the age thing.

Of more interest, tourism continues to grow at 10% in the year to the end of February 2016. http://www.sharechat.co.nz/article/8...ruary-yearhtml

I suppose all those new migrants which are additional to the tourism growth want to travel around their new country too and have their visitors come and stay in the future. They might even fly VAH part of the way...looks like it could do with the help.

[winner69]

The only odd bit from those travel stats today was -'overseas travel by New Zealanders fell sharply in February' (Westpac)