Stupid claims

November 18th, 2013 at 9:00 am by David Farrar

The Herald reports:

Opposition parties are warning of damage to the national interest, higher fares and even a second taxpayer bailout after the Government put another slice of on the block.

Higher fares because the Government will own 53% instead of 73%? No one with a shred of financial knowledge could make such a claim. It’s financial illiteracy at its worse.

Green co-leader Russel Norman said it could lead to reduced regional services or higher fares.

Won’t he be a great Minister of Finance!

Air New Zealand already is a mixed ownership model. Labour and Greens are the worst sort of conservative – they claim the status quo is preferable despite any rational basis for it.

According to Labour and the Greens 73% is the exact right proportion of Air New Zealand to own. Not 82% (or they would have policies to increase it) or 64% or 51%. It must be 73%.

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73 Responses to “Stupid claims”

  1. Cunningham (845 comments) says:

    It’s unbelieveable that our main opposition would be so stupid. Are there people out there who actually believe changing the percentage like this will cause what they are saying? If so please explain to us all why.

    The other thing I find quite rediculious is the claim that it is ‘cynical’ selling at this time. They are at a 5 year high and if they want to talk about cynical, then why don’t they mention the timing of their NZ Power policy? That cost the country hundreds of millions (perhaps even more then a billlion) as well as costing private investors big time.

    As I have said many times before, this country deserves better when it comes to our opposition. We aren’t a third world country so why do they act like a 3rd world government in waiting?

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  2. KiwiGreg (3,259 comments) says:

    Well the Nats aren’t much better. The correct percentage for the government to own is 0%.

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  3. In Vino Veritas (140 comments) says:

    What Russel Norman knows about finance can be written on the back of a postage stamp with a marker pen with the most massive tip. I’d say the same about Cunliffe, but I’d suggest he’s just saying stuff because he needs to keep his profile high (whilst sounding like a clueless dropkick).

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  4. Pete George (23,680 comments) says:

    Norman is trying to talk down the share selldown, as is Cunliffe who on Friday said it was a fire sale.

    Norman’s approach is typical Green ‘any destructive means to promote ideology’ approach.

    Cunliffe’s opposition tactics are of much more serious concern. Leader of the Opposition should have some financial and political responsibility.

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  5. liarbors a joke (1,069 comments) says:

    Get rid of the thing…Governments shouldn’t be in airlines anyway , they are for people with long pockets. Being sold at the right time while the price is high.

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  6. Chuck Bird (4,923 comments) says:

    DPF, 73 is the magic number because 7 and 3 are both primes and the difference between them is 4 which is a significant number as it is the lowest non prime number.

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  7. YesWeDid (1,050 comments) says:

    ‘Get rid of the thing…Governments shouldn’t be in airlines anyway ‘

    Short memories, or do you all choose to forget why the government had to bail out Air New Zealand and how they ended up a shareholder?

    Maybe ‘Ansett Australia’ might ring a few bells.

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  8. anonymouse (721 comments) says:

    We wouldn’t want to mention that when David Cunliffe was Associate Finance Minister his boss got as far as inking the contract to sell 22.5% of AirNZ to QANTAS

    http://beehive.govt.nz/release/govt-approves-air-nz-qantas-proposal-proceeding-commerce-commission

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  9. Than (487 comments) says:

    I disagree Labour and the Greens favour the status quo. Most of their policy is the reverse – demanding radical change even when there is no need for it. NZ Power and KiwiAssure are two examples, Russell Norman’s call for quantitative easing is another.

    In the 2014 election Labour and the Greens will be trying to sell voters on a radical shift to the left, against the background of a booming economy and National (more trusted on economic matters) describing all the negative consequences. It’s just not a viable strategy.

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  10. Manolo (14,029 comments) says:

    The sky is falling, the sky is falling shouts the communist Norman.

    The mind boggles when you consider how many gullible youngsters, unreformed hippies, and adorers of Gaia are prepared believe this potential destroyer of out economy.

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  11. All_on_Red (1,643 comments) says:

    Shame we don’t have any journalists who are capable of calling bullshit on these stupid statements.

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  12. KiwiGreg (3,259 comments) says:

    @yeswedid the government didn’t “have” to bail out the airline. It should have let it go bankrupt like any other private company. Private capital would have replaced the loss. There is NOTHING systemically important about Air New Zealand.

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  13. sparky (235 comments) says:

    Who in there right mind would take any notice of Cunliffe with the TWO mouths, or Taliban Norman, who is simply talking out of an empty head. They wouldn’t know what 73% even meant. I have never seen in all the years I have been following politics, such a dreadful Labour Party. The Greens well they are just a nightmare.

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  14. Simon (758 comments) says:

    “Short memories, or do you all choose to forget why the government had to bail out Air New Zealand and how they ended up a shareholder?”

    The government bailed out Air NZ due to failure of its own regulation.

    And is YesWeDid some reference to Obama? Lol what a clown.

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  15. wikiriwhis business (4,115 comments) says:

    Hidden due to low comment rating. Click here to see.

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  16. wikiriwhis business (4,115 comments) says:

    Hidden due to low comment rating. Click here to see.

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  17. wikiriwhis business (4,115 comments) says:

    Hidden due to low comment rating. Click here to see.

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  18. ChristineY (7 comments) says:

    Arn’t we supposed to believe that David Cunliffe has a strong business background because of his education and time at Boston Consultancy Group? If so, he has a good opportunity to demonstrate it with his comments on how boards operate in relation to the Air New Zealand sell down, otherwise can we infer that this is another CV fudge?

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  19. All_on_Red (1,643 comments) says:

    Wiki
    Have you ever considered that if we didn’t have Cullen’s scorched earth budget which left the cupboard bare and the massive overspending on public services/welfare then selling these things might not have been necessary?

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  20. Pete George (23,680 comments) says:

    ChristineY – I think it shows that Cunliffe puts his political ambitions ahead of anything he might have learnt from his business background.

    In effect he is trashing his main strength with centre swing voters – financial competence – in order to compete with the Greens and Mana for left wing votes.

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  21. Nookin (3,455 comments) says:

    “The case of the Crafer farms should have convinced NZ completely the National govt under banker John Key is intent on selling the nation and making Kiwi’s tenants in their own country.

    Has it occurred to you that the rules that the government applied at the time were exactly the same rules promulgated by Labour and that labour, unless it changed its mind simply on the grounds that the purchasers were Chinese, would have come to exactly the same result?

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  22. RightNow (6,995 comments) says:

    wikiriwhis business (2,058) Says:
    November 18th, 2013 at 9:51 am

    ‘ the government didn’t “have” to bail out the airline. It should have let it go bankrupt like any other private company. Private capital would have replaced the loss.’

    Unless there’s an agenda. Which is why we got Wall St banker John Key in the first place.

    Please tell us more about this agenda, which clearly Helen Clark and Michael Cullen were party to back in 2001 when their government bailed out Air NZ.

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  23. gazzmaniac (2,307 comments) says:

    Short memories, or do you all choose to forget why the government had to bail out Air New Zealand and how they ended up a shareholder?

    Because when Singapore Airways wanted to bail them out in the government blocked them with foreign ownership rules?

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  24. william blake (109 comments) says:

    “It’s financial illiteracy at its worse.”

    Inumerate and worst.

    Not an especially convincing way to call someone else stupid.

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  25. YesWeDid (1,050 comments) says:

    ‘Because when Singapore Airways wanted to bail them out in the government blocked them with foreign ownership rules?’

    And what a great deal it has been. The government paid 24c a share and will be selling at around $1.60.

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  26. redqueen (582 comments) says:

    The real question now, David, is: will Labour and the Greens announce an NZ Air Authority to centrally purchase tickets to ‘keep prices low’, mandating routes that must be flown, and so forth? They seem quite happy to make kneejerk (or is it just jerk…) reactions, usually with no time to consider the impact, and with malicious consequences to taxpayer interests.

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  27. gazzmaniac (2,307 comments) says:

    YesWeDid – and in that time it has lost money on Solid Energy and probably Kiwi Rail.
    One good investment and two that ate the profits.

    The government shouldn’t be buying failing companies and turning them around. That is the job of receivers.

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  28. RightNow (6,995 comments) says:

    YesWeDid (956) Says:
    November 18th, 2013 at 10:19 am

    And what a great deal it has been. The government paid 24c a share and will be selling at around $1.60.

    It makes you wonder why the government doesn’t sell all their shares doesn’t it?

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  29. Grizz (610 comments) says:

    They must think we are stupid. Consider the Greens running Government. They will ramp up Carbon taxes, emissions charges and slap on taxes left right and Centre that will make the cost of flying prohibitive. Who is raising airfares now?

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  30. wikiriwhis business (4,115 comments) says:

    ‘Please tell us more about this agenda, which clearly Helen Clark and Michael Cullen were party to back in 2001 when their government bailed out Air NZ.’

    The UN agenda 21 which will have us all living in small boxes which was the inspiration for the Reserve Bank to up home deposits which has squashed both the buying and selling markets

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  31. wikiriwhis business (4,115 comments) says:

    ‘Wiki
    Have you ever considered that if we didn’t have Cullen’s scorched earth budget which left the cupboard bare and the massive overspending on public services/welfare then selling these things might not have been necessary?’

    Banning nuclear ships and billions of dollars in servicemen spending, I would suggest, is why we are so heavily policed on the roads.

    Where is the nuclear danger in Oz up to now?

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  32. freedom101 (508 comments) says:

    The more air time that Cunliffe and Norman get, the better. I’d even consider contributing to an advertising budget for them. They will say anything for a headline, even when, in the case of Cunliffe, he cannot possibly believe what he’s saying.

    The government should have sold right down, to 0%, or maybe 20%. To leave it at 53% leaves the perception that the government should retain a controlling interest.

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  33. trout (944 comments) says:

    It is easy to believe that we can exist as an unfettered market economy where the strongest survive. Unfortunately our geographical isolation, and relatively small economy ( which endeavors to sustain a first world life style on second world rural industry) make that untenable. Efficient transport links are absolutely essential to support exports (we achieve value in food products by being able to deliver fast and fresh) and tourism. A locally controlled international airline which promotes the NZ brand and provides reliable service may be ideologicaly unpalatable but is necessary. The decision to buy Ansett was a pragmatic business decision which would have been successful but for interference by Prime Minister Keating (supported by the Unions – who in the event self-destructed). So the Government bailed Air NZ out (in the public interest) and is now able to recoup its investment (there is no need to retain even 53%). Seems to me to be a good resolution all round.

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  34. Cunningham (845 comments) says:

    wikiriwhis business (2,065) Says:

    “inspiration for the Reserve Bank to up home deposits which has squashed both the buying and selling markets”

    The policy is doing exactly what was intended – cooling the property market. Please explain why it is sensible for someone to buy a $600,000 home in Auckland with a 5% of 10% deposit? When the interest rates inevitably rise, the thing we will be asking is why was it not put in place earlier!

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  35. virtualmark (1,536 comments) says:

    KiwiGreg:

    @yeswedid the government didn’t “have” to bail out the airline. It should have let it go bankrupt like any other private company. Private capital would have replaced the loss. There is NOTHING systemically important about Air New Zealand.

    Not so. The reason the Government bailed out Air New Zealand was because they couldn’t tolerate the disruption a bankruptcy would cause to domestic and international travel. Businesspeople wouldn’t be able to fly up and down the country. Mums & Dad’s wouldn’t be able to go visit Grandma. International tourists wouldn’t be able to get here, or to get home afterwards.

    Like it or not we are a set of islands that needs air links to the rest of the world. Like it or not we are a long narrow country that needs air links between major population centres.

    A bankruptcy would have taken months to resolve. During that time there’d have been no flights. There were no guarantees what level of service any new owner would implement. Or how capable they were. People who’d pre-paid for travel would have lost their money.

    The financial and social cost of all that disruption was WAY WAY WAY MORE than the cost of the bailout. The Government had no rational option but to re-capitalise Air NZ.

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  36. davidp (3,587 comments) says:

    redqueen>The real question now, David, is: will Labour and the Greens announce an NZ Air Authority to centrally purchase tickets to ‘keep prices low’, mandating routes that must be flown, and so forth?

    The semi-corporate model that you propose just doesn’t make sense, because it doesn’t account for the need to deliver air travel services to children living in poverty. The only socially-acceptable solution is to de-list Air NZ and turn it in to a 1930s-style Air Ministry, staffed by PSA members. Air travel for children living in decile 1 and 2 areas could be free, while travel for children living in decile 3 and 4 areas would be subsidised. The meals served onboard would be organic, low fat, and vegetarian. The aircraft would be powered by renewable bio-fuel. Pilots wouldn’t earn rich prick salaries, but would receive a living wage. University students would fly for free, but would be expected to pay the fare at some future point. Interest free.

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  37. wikiriwhis business (4,115 comments) says:

    ‘When the interest rates inevitably rise, the thing we will be asking is why was it not put in place earlier!’

    Absolutely agree. But it was only a matter of time before prices, rates, power, petrol, rents would have kept first home buyers out of the market anyway. If the living wage is raised prices will automatically rise as well putting everyone back to square one.

    I would suggest the Reserve Bank is n’t hindering the market but personal financial progress.

    At least the banks are being put to account

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  38. burt (8,305 comments) says:

    Bring back Jolly Jim… We could have KiwiAir which would be marketed as a zero fare airline for battling kiwi travellers. We could pump billions of tax payers dollars into it and it could quickly forget it was supposed to be free and then end up in a class action lawsuit for overcharging… But it would be ok because the people own it.

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  39. gazzmaniac (2,307 comments) says:

    trout:

    The decision to buy Ansett was a pragmatic business decision which would have been successful but for interference by Prime Minister Keating

    Air New Zealand bought its first stake in Ansett in 1996, and John Howard became PM early 1996. There would have been little opportunity for Keating to interfere. It wasn’t till 2000 when Air NZ bought a controlling stake in Ansett.

    I would also like to make the point that Air NZ has a ~26% stake in Virgin Australia, and if regulatory approval is given so will Singapore and Etihad. That will give the Air NZ/Singapore alliance a controlling stake in Virgin. Perhaps there is more to this than simply the government profit taking.

    virtualmark:

    Mums & Dad’s wouldn’t be able to go visit Grandma. International tourists wouldn’t be able to get here, or to get home afterwards.

    I call bullshit. Most people drive, not fly, around New Zealand because of its compact size. International tourists could easily take another airline, there are plenty.

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  40. All_on_Red (1,643 comments) says:

    Wiki
    Are you trying to say that inflation is good? Because inflation is what you will get with that sort of economic nonsense

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  41. wikiriwhis business (4,115 comments) says:

    ‘Wiki
    Are you trying to say that inflation is good? Because inflation is what you will get with that sort of economic nonsense’

    Has the fight against inflation stopped the devaluation of the dollar.

    since the US Federal Reserve was instituted in 1913 the dollar is now worth 1% of it’s 100% worth in 1913.

    Pfft with inflation. Biggest red herring around

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  42. Jack5 (5,145 comments) says:

    Sell the bloody lot of the Air NZ shares.

    Buy them back for 2c each next time the airline is in a crisis.

    Airlines are notoriously volatile businesses. A Government might do well by buying at 2c or from the receiver at 0.2c then flogging the shares off at the top of the cycle, as National is doing now. State capitalism, like Red China’s.

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  43. gazzmaniac (2,307 comments) says:

    Or the government could leave the airlines alone and let the private sector take the risk.

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  44. burt (8,305 comments) says:

    gazzmaniac

    Where is the electoral potential in not giving the people what you tell them they want ?

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  45. KiwiGreg (3,259 comments) says:

    virtualmark, you don’t seem to understand business at all. A bankruptcy of Air NZ would not mean an end to air travel, any more than the bankruptcy of Ansett Australia ended air travel in Australia. The private sector would pick up the slack, new airlines would be formed. Life would go on. The only difference would be taxpayer money would not be at risk.

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  46. Ed Snack (1,925 comments) says:

    If ANZ had called in the receivers, then the receivers would have kept the company and essentially all the flights running. If the shut it down the value of the operations would very rapidly reduce which is one thing the receivers would want to prevent. So there wouldn’t have been a sudden shutdown.

    As I recall, the major problem that ANZ encountered was in buying Ansett at an inflated value without understanding the Australian part of Ansett’s real problems: inflated labor costs imposed largely by Australian labour rules. Presumably ANZ management believed that they could reduce the costs of the Australian operations sufficiently to become competitive but in the face of absolute intransigence in the Australian unions over manning levels and conditions, they couldn’t, and Ansett Australia was a huge cash drain for ANZ as a whole. The original ANZ part of the company remained profitable, especially as they had removed their only competitor in the internal NZ market, something we are still paying for today in high domestic airfares especially to the regions.

    ANZ has been relatively well run since then, and probably has close to its maximum value. So I’d sell out now gathering as much cash as possible for it. If it repeats the same errors again then it won’t be the taxpayer meeting the bill without having some way to extract a profit for the rescue again. There’s little upside (IMHO, and I may well be wrong on this) to holding onto the ownership except for some political nationalistic reasons, and good reasons to cash in on the “win” that the bailout was.

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  47. mandk (1,015 comments) says:

    @ Grizz,

    If the Greens come to power, aircraft powered by hydrocarbons will be banned and they will be replaced by planes powered by fairy dust.

    And it wouldn’t matter if Air New Zealand loses money – they’ll just print lots of 100% organic bank notes to pay the creditors.

    Just show a little faith, will you.

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  48. trout (944 comments) says:

    For those who are unaware of the efforts of AirNZ to participate in the Australian domestic market (to complement their International business – forward bookings etc. etc.) – this is a good read.

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=217630

    And for Gazzmaniac a quote from the article. I suggest that he read it in full:
    ‘ Air NZ’s Australian strategy was frustrated yet again by the Keating Government’s intervention.

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  49. Colville (2,298 comments) says:

    I call bullshit. Most people drive, not fly, around New Zealand because of its compact size. International tourists could easily take another airline, there are plenty.

    I call utter bullshit on your bullshit call.

    I live in Palmerston North, if I want to vist friends in Auckland or Christchurch its $400 each for us to fly unless we book 3 months ahead which is a fucking ripoff!, there is only one airline and its AirNZ !

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  50. srylands (414 comments) says:

    “I live in Palmerston North, if I want to vist friends in Auckland or Christchurch its $400 each for us to fly unless we book 3 months ahead which is a fucking ripoff!, there is only one airline and its AirNZ !”

    I call bullshit on your bullshit call. If Air NZ was making supernormal profits out of PN, you would see Jetstar start up a service. They don’t. Why? Becasue air traffic out of PN is a dog commercially.

    You are not being ripped off. You are paying the price for living in Palmerston North.

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  51. gazzmaniac (2,307 comments) says:

    ‘ Air NZ’s Australian strategy was frustrated yet again by the Keating Government’s intervention.

    The problem was that the New Zealand government allowed Ansett to fly in NZ but did not return the favour – they backed out of an open skies agreement.
    That led to Air NZ buying Ansett just to get a foot hold in the Aussie market. But it wasn’t Keating who has the blame for that. Unions, yes, but Keating was long gone by then.

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  52. gazzmaniac (2,307 comments) says:

    I live in Palmerston North, if I want to vist friends in Auckland or Christchurch its $400 each for us to fly unless we book 3 months ahead which is a fucking ripoff!, there is only one airline and its AirNZ !

    Or it’s $70-odd on the train, or $20 on the Naked bus, or $200 petrol. Not my fault you’re happy to be raped by an airline to save a seven hour drive. There is a reason why people don’t fly in NZ.

    I’d drive to NZ from Australia if I could.

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  53. Paulus (2,657 comments) says:

    On Radio Left Wing this morning they were quoting the world’s expert Rod Oram’s opinion that the Government should not down sell Air NZ.

    So well done it must be the right decision – any decision that potential Labour list MP gives is always wrong.

    As always do the opposite to Oram, and it will be the right decision.

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  54. Colville (2,298 comments) says:

    gazz @ 1.01.
    either train or bus or driving still kill a day each way which is the real cost not the gas or the ticket. I would drive everywhere if I could do it at 600 km/hr.

    Driving back from Auckland with a thumping hangover on a Sunday morning makes the drive seem like 27 hours long.

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  55. virtualmark (1,536 comments) says:

    gazzmaniac:

    Mums & Dad’s wouldn’t be able to go visit Grandma. International tourists wouldn’t be able to get here, or to get home afterwards.

    I call bullshit. Most people drive, not fly, around New Zealand because of its compact size. International tourists could easily take another airline, there are plenty.

    I recommend you pop into the domestic terminal at Auckland Airport on any weekend. Those people aren’t there for the food. Sure, lots of people drive. And lots of people fly too.

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  56. virtualmark (1,536 comments) says:

    KiwiGreg:

    virtualmark, you don’t seem to understand business at all. A bankruptcy of Air NZ would not mean an end to air travel, any more than the bankruptcy of Ansett Australia ended air travel in Australia. The private sector would pick up the slack, new airlines would be formed. Life would go on. The only difference would be taxpayer money would not be at risk

    I have a very good understanding of business. And I will wager I was a lot closer to the Air NZ recap than you were. Air NZ had no money. The receiver wouldn’t have been carrying on an airline operation. They would have been selling the company’s one liquid asset … the planes.

    Believe me, if the Government hadn’t recapitalised Air NZ when it did then there would have been a significant multi-month disruption to air travel in, out and within New Zealand.

    And as for you contention that private sector would pick up the slack … Singapore Airlines was sitting frozen in fear on the sidelines while all this was going on. Already a shareholder, with the knowledge of how to pick up the pieces of a damaged airline, and they had no shortage of cash. But they were absolutely paralysed in terms of making any decisions. If they weren’t able to assure continued operation how was anyone else going to?

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  57. virtualmark (1,536 comments) says:

    Ed Snack:

    If ANZ had called in the receivers, then the receivers would have kept the company and essentially all the flights running. If the shut it down the value of the operations would very rapidly reduce which is one thing the receivers would want to prevent. So there wouldn’t have been a sudden shutdown.

    And how were they going to pay the bills?

    The size of the hole in Air NZ’s finances was so large the receivers would have had no option but to shut the operation immediately and start selling off the company’s assets.

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  58. virtualmark (1,536 comments) says:

    Ed Snack:

    As I recall, the major problem that ANZ encountered was in buying Ansett at an inflated value without understanding the Australian part of Ansett’s real problems: inflated labor costs imposed largely by Australian labour rules. Presumably ANZ management believed that they could reduce the costs of the Australian operations sufficiently to become competitive but in the face of absolute intransigence in the Australian unions over manning levels and conditions, they couldn’t, and Ansett Australia was a huge cash drain for ANZ as a whole. The original ANZ part of the company remained profitable, especially as they had removed their only competitor in the internal NZ market, something we are still paying for today in high domestic airfares especially to the regions.

    They had two major problems. First, they were incredibly badly managed. Both at Board and executive level. Yes there were some good people in there, but not enough good people. Ralph Norris and Rob Fyfe are an order of magnitude better than the people running Air NZ prior to the recap.

    Second, Ansett Australia. Initially they’d been co-shareholders with News Corp. Perhaps they didn’t realise it at the time but that had shielded them from Aussie political games – no one wanted to mess with Murdoch. Once News sold its shares to Air NZ then they lost that political shield. All the promises about open skies evaporated. It also exposed them to the full power of the unions too.

    Alongside that Ansett Australia was a basket-case of odd planes, old equipment, incompatible systems. Ansett had been mis-managed for years and years. Air NZ should have seen all that in their due diligence and walked away. But they soooo badly wanted to get into the Aussie domestic action that they just closed their eyes and dived in.

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  59. virtualmark (1,536 comments) says:

    gazzmaniac:

    Because when Singapore Airways wanted to bail them out in the government blocked them with foreign ownership rules

    Singapore Airlines standing ready to bail out Air NZ is a myth. Just like the myth the US Marines would have built the Transmission Gully motorway with a few months work in 1942.

    Singapore Airlines was a stunned mullet in the Air NZ/Ansett “crash”. When the pressure went on them to act they were just frozen on the spot. But the prevailing myth is that they were there in the room waving their chequebook waiting to buy Air NZ and recapitalise it. Didn’t happen.

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  60. gazzmaniac (2,307 comments) says:

    And you know this how?

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  61. igm (1,413 comments) says:

    I hope NZ public remember how fiscally inept the opposition parties of this country are on election day. If Cunliffe, Norman, and Parker are any example of the talents they offer, JK must be pissing himself with laughter. One only has to assess their personal efforts, not one of them showing any commercial success, one even going broke in a small business in good times, wrecking the life of his business partner.

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  62. freedom101 (508 comments) says:

    igm – who was it that went bust?

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  63. gazzmaniac (2,307 comments) says:

    Without knowing who it is and what business it was, maybe that person does actually know a lot about business.
    I would certainly say that he or she knows more about winding up a business and the toll it takes on one’s life than most other MPs, and can probably bring something to the table from their experience.
    It might have been run badly, or it might not have. Given that something like 2/3 of all small businesses fail within five years, it certainly doesn’t surprise me that a small business might have gone under in “good times.”

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  64. KiwiGreg (3,259 comments) says:

    “I have a very good understanding of business. And I will wager I was a lot closer to the Air NZ recap than you were. Air NZ had no money. The receiver wouldn’t have been carrying on an airline operation. They would have been selling the company’s one liquid asset … the planes.”

    You’d lose that bet. For starters Air NZ owned almost no aircraft, most airlines don’t. The lessors may well have taken possession (receivership would be an event of default) and so effectively shut them down but it’s much more likely that cash positive routes would continue to be run (Auckland-Wellington etc). Sure there would be some inconvenience to customers until third party private sector players picked up the slack but hardly armageddon.

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  65. itstricky (1,880 comments) says:

    Stupid claims rightly. You seem, however, to be ignoring the question everyone else is asking though – why now under the cover of darkness? Cherry picked the article I guess – that was the main gist of it

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  66. adc (595 comments) says:

    depending on the company’s constitution, there may or may not be some rights/powers ceded by moving from just over 3/4 ownership to just over 1/2.

    Not everything is necessarily a simple majority thing.

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  67. Nostradamus (3,433 comments) says:

    virtualmark:

    When you say you have – not think you have – a good understanding of business, do you put yourself in the same league as Warren Buffett?

    How do you become a millionaire? Make a billion dollars and then buy an airline.” – Warren Buffett

    Warren Buffett on airlines:

    If a capitalist had been present at Kitty Hawk back in the early 1900s, he should have shot Orville Wright. He would have saved his progeny money. But seriously, the airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in.

    You’ve got huge fixed costs, you’ve got strong labor unions, and you’ve got commodity pricing. That is not a great recipe for success. I have an 800 number now that I call if I get the urge to buy an airline stock. I call at 2 in the morning and I say: ‘My name is Warren, and I’m an aeroholic.’ And then they talk me down.

    Now coming back to you, virtualmark, I don’t think I’ve seen you justify why the government (ie taxpayers) has to own Air NZ.

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  68. Monique Angel (294 comments) says:

    Whoever owns it has to kick the tires of the business model. More people flying into New Zealand to offset the poor performing routes. A joint strategy with Tourism NZ to tap the Asian and American markets in particular. I’ve lost track of the number of Americans who say,”My dream is to visit New Zealand one day”. Problem is there ‘s no marketing here to tell us how to do so. And the American market just isn’t going to sell itself; American’s are big travelers but not necessarily explorers outside of this continent. It’s the biggest back yard in the world over here so you have to have a good reason to travel. Reasons to travel tend to tie back to taking them back to their homeland or other ties with a country, or to travel to a destination for luxury and to experience the ‘story’ of a destination.
    There us huge potential if you get the some big thinking buggers on board. Selling shares is an opportunity to do so.

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  69. wikiriwhis business (4,115 comments) says:

    ‘Wiki
    Are you trying to say that inflation is good? Because inflation is what you will get with that sort of economic nonsense’

    If you and everyone else really did understand economics you would all demand a universal end to keysnian ecomomics which has destabilised the whole world and demand non socialist unregulated Austrian economics.

    And bring about the downfall of the Reserve Bank

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  70. emmess (1,432 comments) says:

    The Herald poll is interesting

    Great! l’m ready to buy shares 16%
    16%
    Fine, it’s only 20 per cent 36%
    36%
    Not sure – will wait and see 11%
    11%
    It’s totally irresponsible 37%
    37%

    52% to 37% in favour of this particular asset sale
    I am not sure the referendum will go that strongly the way everyone is expecting.

    Also, doesn’t Silent T look like even more of dickhead than normal calling the sell down ‘fire sale’ when they are going for top dollar?

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  71. Pete George (23,680 comments) says:

    Talking about stupid claims and dickheads…

    RadioLIVE Newsroom ‏@LIVENewsDesk

    Labour’s not satisfied with Govt’s assurances about asset sales programme saying National will carry on selling until there’s nothing left

    This is presumably in response to Bill English saying today that National won’t be selling any more assets because there are no more worth selling.

    Maybe Labour will start their post Clark/Cullen recovery next term.

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  72. Ross12 (1,453 comments) says:

    So the situation is simply an investor ( the Govt ) sells some shares , makes $300 odd million on the original TOTAL investment , still has controlling interest in the company , business / management will continue as normal ( with perhaps some positive ideas put in at board level) and we have the people ( Cunliffe and Norman) who want to run the country after the next election saying this is a bad deal. Either I’m missing something very simple here or the Opposition are absolute nutters.

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  73. BigFish (132 comments) says:

    A sell down doesn’t seem a particularly bad an idea while maintaining the 53%.

    I’m not sure there’s that much goodwill to actual customers of the airline. Happy shiny advertising isn’t matching the experience on some routes – but it is variable. For example there is a noticeable difference between Hong Kong and Tokyo flights in terms of meal quality and service.

    There’s a risk of having a disconnect what people believe the service to be like based on its marketing, versus the experience of frequent flyers – especially tourists:
    They’re cramming too many economy seats in at the back of the long haul planes – squeezing 10 abreast where they used to have 9 in 777s on 12 hour flights,
    they’ve reduced the value of their airpoints over time and the fares that you can accrue them on (grab-a-seat fares are excluded),
    they’ve eliminated stand-by fares,
    they seem to have reduced their grab-a-seat offerings for overseas fares in particular,
    they have argued to reduce trans-tasman capacity on code-share monopoly routes where sale fares seem to be harder and harder to find,
    they’ve eliminated business class seats on code share routes (and all Wellington flights),
    they’ve cut regional routes despite local infrastructure spending,
    they’ve introduced seating options (cuddle class) where the comfort hasn’t apparently matched the hype,
    they’ve introduced a premium economy class that takes up plenty of floor space and is fairly expensive for it,
    they’ve had a couple of customer service disputes (including the cancer cancellation) that have gone public when they could have been sorted privately,
    they’re consistently telling Wellington region customers that they will resist any airport improvements despite Wellingtonians suspecting they’re being charged higher long haul flight costs,
    they’ve been acting to charge for standard inclusions on increasingly long flights – even 6 hour Hawaii flights have cost-additional meals and movies over and above the advertised fares now,
    and there are whispers and court disputes regarding the employment of staff – the people who have managed to provide a good quality of service despite ongoing service changes.

    These things begin adding up, making the goodwill risk factor fairly variable – in addition to fuel costs and new fleet delays.

    Makes me feel less bullish about the long term direction of the company. If I seek alternatives for long-haul travel, then who else does?

    There is good – they’ve been good at marketing and advertising, their fleet is fairly modern and is safe. But some of the initiatives obviously intended to improve customer experience and loyalty seem to have been blunted by the calculator – which is riskier than bean counters realise.

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