Air New Zealand is at the back of the queue for partial asset sales, with chief executive Rob Fyfe saying he’d be “surprised if the Government would be wanting to sell” at the current low share price.
Legislation for the Government’s multibillion-dollar selldown of state assets will dominate Parliament’s agenda this week as it goes through final stages before passing into law.
The Mixed Ownership Model Bill will attract dozens of proposed amendments from opposition parties, including a bid for the companies to remain subject to scrutiny from the Ombudsman.
After the bill passes, the Cabinet will be able to mandate a selldown of up to 49 per cent of four energy companies and Air New Zealand.
Electricity company Mighty River Power is scheduled to be the first listed for sale, with an estimated $1.78 billion to $1.82b in the offing from a 49 per cent reduction in Government shareholding.
Meridian Energy could fetch up to $3.2b, Solid Energy $1.35b and Genesis $1.03b.
But Air New Zealand, already jointly listed on both the Australian and New Zealand stock exchanges, has an existing market capitalisation of $950m, meaning a selldown from 73 per cent to 51 per cent might reap only about $212.6m.
Mr Fyfe said airline share prices were “clearly at a cyclical low in the Australasian region” at the moment. “As such, it would appear to be a good time to be a buyer of airline stocks rather than a seller.
“While I have no knowledge of the Government’s intentions other than what has been stated publicly, I see the Government as an astute value investor and would therefore be surprised if they would be wanting to sell at these price levels.”
Since January last year, Air New Zealand’s share price has dropped from about $1.50 a share to 86 cents. It peaked at almost $2.50 in mid-2007.
Prime Minister John Key said Air New Zealand was “certainly not the first, second or third cab off the rank” for the sales programme.
“Yes, that’s our intention … [but] no, not at any sort of price. And if airlines continue to be fairly weak, I wouldn’t anticipate us rushing out to the market.”
Labour leader David Shearer said the Government had no real “wriggle room” to back out of the sale because the revenue from sales was already in spending plans.
– © Fairfax NZ News
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