When it went broke, Air NZ should have been left to go under. Or sold to Singapore airlines. Instead, Helen Klark and Michael Cullen, always generous with other people’s money, bailed it out and kept it flying because of some misguided socialist concern that the company was a “national icon”.
The government now holds about 73% ownership of a company in one of the most competitive and capital intensive industries there is, and that is now facing a business environment that, even if Air NZ is well managed, could cause it to collapse all over again. Brian Gaynor in the NZ Herald reports-
The International Air Transport Association forecasts illustrate the difficulties the industry faces. IATA expects the industry to report net earnings of US$6.9 billion ($9 billion) this year, compared with US$15.8 billion last year, and it has cut its forecast for next year from US$4.9 billion to US$3.5 billion.
Air NZ has $3 billion in the bank but that can be spent fairly quickly in a non-profit environment. It’s worth about $3.4 billion at current share value, but who knows how long that will stand? Anyone buying an airline right now is taking a huge gamble.
The government should get out of the airline industry and make Air NZ its second sell off while the shares are still worth something. The way things are trending, it looks like Singapore Airlines will end up owning most small airlines in Asia-Pacific anyway. If those small airlines don’t go totally broke that is.
TrueblueNZ 
3 responses to “Helen Klark’s Airline- Sell It While Its Still Got Share Value”
Warren Buffet once remarked, if you want to become a millionaire, start off as a billionaire and buy an airline.
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Management guru Peter Drucker once described what he called “widow makers”. Like jinxed sailing ships that earned evil reputations for killing crewmen and never turning a dollar of profit for their owners, there are certain jobs and industries that also kill careers and profits – no matter how much investment and talent is pitched into them.
Third-tier “national air carriers” are unquestionably widow makers.
Drucker’s advice is sage: once identified, widow makers must be closed down
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Yeah well, with three billion in cash its only worth $3.4 billion.
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