Airline chief tips share float price

Press, 8 June 1989, Page 31

Airline chief tips share float price

By Mark Reynolds NZPA correspondent in Auckland Air New Zealand’s chief executive, Mr Jim Scott, says he expects Air New Zealand shares to be listed on the Stock Exchange at about the same price the Brierley In-vestments-Qantas led consortium paid the Government for them in April. The Government was paid $660 million (about 235 cents per share) for the airline, with 65 per cent of the company going to Brierley, 19.9 per cent to Qantas, 7.5 per cent to American Airlines and 7.5 per cent to Japan Airlines. Although the price has yet to be finalised, it would be "in the region of what the consortium paid,” Mr Scott said.

As a condition of purchase, Brierley pledged to on-sell 35 per cent of its holding to the New Zealand public and the airline’s staff, with any profit to go to the Government. Mr Scott said the stake should be listed on the exchange by October. As a prelude to listing, a prospectus would be issued within a month, Mr Scott said. Asked about what earnings the company was likely to have in its first year of privatisation, Mr Scott said he could not make projections because of Securities Commission restrictions. However, the company’s

turnover would approach $l.B billion in the current year, he said. Of the world's 250 international airlines, Air New Zealand is the thirtieth largest in terms of passengers carried, he said. International passengers account for 80 per cent of the company’s work, with 40 per cent of them New Zealanders.

Mr Scott said Air New Zealand expected to increase its international carriage by 80 per cent in five years. A stumbling block to the growth could be a revision of Air New Zealand’s designated carrier status. The airline has bilateral agreements with many countries to operate exclusively on routes to or from New Zealand. The status is being challenged by Air New Zealand's domestic rival, Ansett New Zealand. Ansett, which has applied in New Zealand for an international carrier licence, has not been eligible for the designated carrier status because it is not substantially New Zealand owned. Ansett has mooted that it will float shares locally to become eligible. Mr Scott said even if that was done, the Australianowned airline should be turned down because of the time and money Air New Zealand had spent developing the overseas routes.

As an example, the company spent 20 years promoting itself in Britain before flying there direct, Mr Scott said. Mr Scott said he would meet tire Prime Minister, Mr Lange, to discuss a continuation of the airline’s status. “We will be indicating to Government our state of development in those (overseas) markets and the time span to operating there. “Air New Zealand’s main thrust will be in the Asia/ Pacific region,” he said. World passenger numbers are expected to lift 8 per cent to 10 per cent within five years, but the Asia/Pacific region is expected to grow at twice that rate.

As an example for the potential of Air New Zealand to exploit the area, Mr Scott said Thai Airways was predicting 22 per cent growth for the current year. In four to five years Thai had doubled its international fleet to 50 aeroplanes to cope with the increased demand. Air New Zealand will also be adding to its fleet. The airline takes delivery of a new Boeing 747-400 in October, a second in August next year and a third in 1992. In September last year the airline’s “widebody” fleet comprised five Boeing 747 s and four Boeing 7675, but by September next year that will increase to seven 747 s (two 400 series) and seven 7675, Mr Scott said.