Dann on Air NZ sell down

November 19th, 2013 at 7:00 am by David Farrar

NZ Herald Business Editor Liam Dann writes:

The sale of the Government’s shares shouldn’t be lumped in with the political scrap over the sale of state owned enterprises (SOEs) as it has been by opposition parties.

Air New Zealand is already a private company. It is publicly listed which means anyone can buy shares and the company must abide by NZX market regulations around disclosure.

Air New Zealand, in its current form, was never a state owned enterprise. The Government investment was a bailout which came about of necessity when the company went to the brink of collapse in 2001.

However much you feel the blame for that failure can be attributed to its private ownership structure at the time, that structure is not being copied here.

This is not, as the opposition says, history repeating.

Today we own a 73 per cent stake by the end of tomorrow we’ll own 53 per cent. So what? The numerical change doesn’t alter the control that Government has as majority shareholder.

Why is 73% the magically correct number? If Labour is against selling down to 51% then why don’t they announce a policy to buy 100% of Air NZ?

The taxpayer has done well from the investment – but when you look around the world at the performance of airlines you’d have to say this is a rare bonus.

Airlines are highly competitive risky businesses. There is no compelling reason for that risk to be all or mainly state owned.

Claims that the airline may now charge higher prices and neglect regional routes are ludicrous. 

Bat shit crazy.

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20 Responses to “Dann on Air NZ sell down”

  1. seanmaitland (500 comments) says:

    If they raise their prices on the main routes then Jet Star will simply put on extra flights and take all their business. They are already charging an arm and a leg for the non trunk routes and raising prices further will result in them having empty flights.

    Idiot Greens don’t ever seem to think through things before making wild claims.

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  2. OneTrack (3,107 comments) says:

    “Idiot Greens don’t ever seem to think through things before making wild claims.”

    Thats partly because they all skipped economics and instead did arts appeciation and political science courses. Economics classes were for neolibs. They all live closeted in the public service or a political activism party.

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  3. BeeJay (72 comments) says:

    A sound and factual evaluation by Liam Dann. So why don’t these idiot politicians understand. I can understand why the idiot green Australian wanker can’t work it out, but I would have expected Cunliffe to have taken a breath before sounding off. He is supposed to have had some actual work history outside of Parliament, unlike the majority of his associates! Air NZ is a public company, already listed on the stock exchange, you could buy their shares last week, you can buy their shares this week! An investor has decided to sell down their Air NZ portfolio from 73% to 53%! Willing seller and willing buyers! It’s grandstanding from Cunliffe, pure and simple! Just trying to confuse his followers even more!

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  4. Pete George (23,567 comments) says:

    Cunliffe and Norman scream “fire sale” in the plane and they want to be to pilots?

    I would have expected Cunliffe to have taken a breath before sounding off.

    By all accounts Cunliffe is supposed to be intelligent, but that’s not the same as being smart.

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  5. adamsmith1922 (890 comments) says:

    As usual Wussel displays his financial and economic illiteracy. Both he and Cunliffe reveal themselves, yet again, as cynical opportunists whose nonsensical utterances are given prominence by a compliant, fellow travelling media.

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  6. Scott1 (552 comments) says:

    What I don’t get is why we are so focused on the 51% number, 51% seems to be the worst of all worlds – you keep government control so the greens can push the management to keep open stupid routes…. but if it is a good investment anyway – you now hand away half of the benefit.

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  7. peterwn (3,273 comments) says:

    Seems to me main trunk average fares are increasing anyway as the economy is picking up – grab-a-seats getting scarce as hens teeth. Interestingly no one is moaning about Inter-City since the Government sold off the long haul coach services ran by the railways.

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  8. Nigel Kearney (1,013 comments) says:

    The sale doesn’t reduce risk because there is no way to prevent a future government bailing out Air NZ if they get into difficulties again. We also don’t get the benefit of having an airline focused on happy customers instead of happy politicians, as long as the government has a majority stake.

    There are two ways this sale can provide benefits to NZ:

    1. By the government having cash now instead of a stream of profits in the future. That depends on the sale price and what the government does with the cash. They might use it more wisely than some future government would use the profit stream, but I have no confidence they will.

    2. By bringing new investment capital into NZ. This only happens if they sell to overseas investors, not Kiwis. This will probably happen, directly or indirectly, and is the real reason to support the sale.

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  9. scrubone (3,099 comments) says:

    It could hardly be clearer that Labour is after the “gullible” vote.

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  10. scrubone (3,099 comments) says:

    By all accounts Cunliffe is supposed to be intelligent, but that’s not the same as being smart.

    Who said he’s not being smart?

    He’s playing to the base, who’re lapping up his rhetoric.

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  11. adze (2,126 comments) says:

    I wouldn’t put it past the Labour unions to get their mates across the Tasman to spike the Virgin Australia capitalisation to hurt Air NZ’s share price.

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  12. Cunningham (844 comments) says:

    scrubone (2,840) Says:

    “He’s playing to the base, who’re lapping up his rhetoric.”

    Yeah but his base isn’t middle New Zealand. Without them on board he has no show of getting into Government.

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  13. Pete George (23,567 comments) says:

    He’s playing to the base, who’re lapping up his rhetoric.

    Yes, his base are lapping it up – or some of his base. He won’t win an election with his hard left base.

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  14. Yvette (2,821 comments) says:

    At what point should the Opposition accept that the partial sale of an asset is in fact a reality, and to bad mouth the position further or issue non factual speculation is undermining the price which could be achieved for the taxpayer.

    Can a party claim to be responsible and acting in the country’s best interest when laws are democratically passed legalizing a partial sale, and the process is actually taking place, and further opposition, spoiling the return to taxpayers at that point, is tantamount to sabotage?

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  15. Cunningham (844 comments) says:

    Yvette (2,568) Says:

    “further opposition, spoiling the return to taxpayers at that point, is tantamount to sabotage?”

    It is absolutely appalling and National hasn’t hammered them enough on the effect their NZ Power policy had on the amount of money the couintry received from the floats. The media should be grilling them, NZ missed out on hundreds of millions due to this hugely cynical attempt to derail a policy National campaigned on for almost a year.

    Not to mention the fact that the policy has been bagged by a large number of people including the person whom they stated was the inspiration for it! When are they going to face the hard questions about the NZ Power policy from the MSM?

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  16. Bob (497 comments) says:

    I get the feeling National is doing a good job of running the country overall. Labour is having difficulty finding solid reason to criticise it’s performance hence they will say anything.

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  17. burt (8,272 comments) says:

    We need the PM to give a clear signal on what is happening – it won’t be insider trading ….

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  18. scrubone (3,099 comments) says:

    It is absolutely appalling and National hasn’t hammered them enough on the effect their NZ Power policy had on the amount of money the couintry received from the floats. The media should be grilling them, NZ missed out on hundreds of millions due to this hugely cynical attempt to derail a policy National campaigned on for almost a year.

    Compared to the US, where Obama still has a widespread program of using the tax system in a way that Nixon never even dreamed of (and what he did want to do he was shut down on), the media here have been pretty good on this issue.

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  19. chris (647 comments) says:

    but if it is a good investment anyway – you now hand away half of the benefit.

    They’re not handing away half the benefit. They may well be throwing away an extra 20% of dividends, but they still get 28% of the profits (via company tax) no matter how much they own.

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  20. Scott1 (552 comments) says:

    Chris,
    I was referring to 51% sell downs in general, in this case yes an extra 20% obviously. in exchange for 20% of the value of the company (minus 3 cents per share I suppose).

    But As per Nigel’s post there are two main benefits and the government is mitigating both of them.

    As to the other point – of course they get tax gains but those aren’t the companies to begin with (Imagine me trying to sell you a company telling you that you were also buying all that lovely tax revenue as well as the after tax income stream, if you like that idea – I have a bridge for you).

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