The little airline with big ideas
Quote:
Originally Posted by
winner69
Google Nanshan and Song Zuowen (in particular) and if you dig a little one can work out who might really control Nanshan
Could be interesting times for Virgin
Maybe Luxon has the laugh last
Of more interest to AIR shareholders now should be the apparent quote from Chairman Carter yesterday that:
"The sale will allow Air NZ to focus on its own growth opportunities"
Although it would be pure speculation at this point but is this all/most/some/none of the recovered cash going to be re-invested and in what?
Best Wishes
Paper Tiger
Never rely on the Media to accuratly report things
Headline in the NBR yesterday Air NZ makes loss of hundreds of millions on sale of Virgin stake The implication was that there is a further loss to be booked of at least $200m and potentially much more. Usually one of the more reliable sources but this didn't look right so I did some digging.
I know for a fact AIR have already taken a write-down on the value of their stake, IIRC this was $50m in a previous year but as at 30 June 2015, see note 12 on page 20 of last years accounts the carrying value of their stake in Virgin was listed at $360m Kiwi.
Looking through Virgin's last annual report AIR are listed as having 913,503,208 shares, (see page 126). If we assume they can get 33 cents Australia for all their shares in due course, (they are selling circa 90% of their stake at this price) that would give a value of $A301,330,606 or based on Friday's interbank exchange rate of 0.9560 = $N.Z.315,330,606, thus a further write-down of $44,669,394 plus whatever their transaction costs and advisor fees are is what we are looking at in the financial year in which this proposed deal goes unconditional.
I note this further write-down amount is less than the proposed settlement of the air cargo matter in America which was just on $51m Kiwi. I think that puts the further loss required to be accounted for into its proper perspective.
If they hadn't taken this further circa $50m (after transaction costs) hit then a bit like the American cargo matter how much more could they have been on the hook for in terms of a capital raise ?
When one is in a black hole, its best to stop digging and climb out rather than buying a new spade and digging harder. Most investors are old enough to remember the Ansett fiasco and the last thing we need is a repeat of that.
Its my sincere hope that this post gives investors some comfort...after all the roller coaster ride has been pretty severe.
Special Dividend Prospects - Please excuse my cynical attitude
An exchange rate over $U.S.70c lowers their balance sheet footings in terms of overseas debt and capitalised lease obligations and will improve their gearing.
Again reported in the NBR that their capex is just over $2b in the next few years but as previously mentioned this is only circa $600 - $700m more than the normal rate of fleet depreciation over that timeframe so net capex is really not such a frightening figure at all especially viewed in the context that they had paid $520m in aircraft deposits already as at 30 June 2015.
Further, we know this is the peak of the earnings cycle. Provided the VAH sale gets the necessary Chinese authorities approval I think we can take it as a given that there will be a special dividend this year, (management were stung by shareholder criticism that there wasn't one last year and I am sure they don't want widespread contempt to reveal itself at the next annual meeting) and there is the very real prospect it'll be bigger than the usual 10 cps paid in various years in the past. The sale proceeds by my calculations, (again not relying on media reports) are 25 cents Kiwi per share less transactions costs so taking into account its been a record year for profit anyway with low oil prices and the fairly miserable interim dividend I see no reason why they can't pay the lot out but they probably won't. Management will probably have some "highly desirable" environmentally friendly pet project they want to fund so maybe us lowly shareholders, (you know the poor sods that they're actually supposed to be running this business for) might be lucky to get a special of 10 - 15 cps ?
Prospects for a final dividend. I think 10-12 cps. Best guess of total, 20-27 cps..risk is probably skewed slightly to the upside. Full imputation credits will apply to dividend(s) paid, that's the one and only thing you can be absolutely certain of.
Somewhat strange sense of humour
Quote:
Originally Posted by
couta1
The arm will be twisted to breaking point and it will be a shout rather than a whisper.
The mental picture of John Key pinning Chris Luxon to the wall whilst Bill English empties his pockets is an amusing one.
Best Wishes
Paper Tiger
Reducing 4D complexity to 2D simplicity
For those of you confused about the recent Virgin/Air New Zealand/Nanshan proceedings I thought I would provide this clarifying graphic:
http://assets.amuniversal.com/0cef85...c6005056a9545d
Best Wishes
Paper Tiger
All numbers are Millions of Dollars
Quote:
Originally Posted by
Roger
I'd like to see your maths on that. I made a call on this a page or two back and welcome your detailed rebuttal of same. $50m write down in prior year and approx. another $50m to come, hardly the hundreds of millions you're claiming.
At 30-Jun-2015 Air New Zealand carried there stake in VAH at NZ$360 having 'lost' NZ$124 on their cumulative investments of NZ$484 (I may have been a bit sloppy, and ignored a few million in transaction costs here :blush:).
If we assume that the entire holding sells for AU$301.3 (ie at 33cps) which is today about NZ$317 then that is a further NZ$43 loss (and ignores any transaction costs etc).
Thus there would be total losses of NZ$167. The actual final bill will obviously be a little different.
Valuing the 'unsold 2.5%' bit at current market price gives a current total loss of NZ$175.
All original numbers sourced from Air New Zealand Financial Statements, Air New Zealand Statements and the ASX.
Quote:
Originally Posted by
Roger
What's clear is that if they hadn't of sold they'd be on the hook for hundreds of millions more share capital to be injected into a loss making company.
The much lesser of two evils has prevailed here.
Taking part in the capital raising is not compulsory.
Best Wishes
Paper Tiger