1.Air NZ to increase capacity on Chch-Hokitika route
Air New Zealand is moving to fly larger aircraft on its Christchurch to Hokitika route.
The route is currently operated by subsidiary Eagle Air's 19-seat Beech 1900D and Jetstream 32 aircraft but from April another subsidiary, Air Nelson, will also fly scheduled return services using its 50-seat Bombardier Q300 aircraft.
New Civil Aviation Authority approval for Hokitika Airport means it can now accept scheduled Q300 flights.
The move will see the route's capacity increase 12.6 percent to 1200 seats a week.
The Q300 will operate a morning return service on Mondays, Wednesdays and Fridays, with an additional return service on Friday evenings.
Some existing flights had been reorganised to accommodate the new services and spread frequency to meet demand.
There were no plans to offer a Christchurch-Westport flight, said Air New Zealand spokeswoman Andrea Dale.
A six-month Eagle Air trial for flights between Christchurch and Westport was scrapped in December 2009 due to lack of demand.
2. Air NZ grabs stake in Virgin Blue
Air New Zealand became “a substantial shareholder” in Australia’s Virgin Blue Group, having recently formed a trans-Tasman alliance with its former rival.
The Kiwi carrier notified the Australian and New Zealand Stock exchanges that it had taken a stake of more than five per cent in Virgin Blue as part of a planned acquisition of a shareholding of 14.99 per cent.
Air New Zealand has paid A$145 million, or 44 cents per share, for this shareholding which was completed with Air New Zealand’s current cash resources.
Air New Zealand, which is majority owned by the New Zealand Government has obtained Australian Foreign Investment Review Board approval to purchase the Virgin Blue stake, a shareholding which would keep the total foreign ownership of Virgin Blue within the statutory limit of 49 per cent.
Sir Richard Branson’s Virgin Group holds 26 per cent of the Virgin Blue Group’s stock.
Air New Zealand chief executive Rob Fyfe released a statement after the market closed saying his airline had no intention of making a takeover bid for Virgin Blue and that he had told Virgin Blue’s chief executive this in a telephone call.
The investment in Virgin Blue is part of Air New Zealand’s strategy to develop scale and reach in this region. The Tasman alliance with Virgin Blue was the first step in this strategy.
“This investment cements the emerging relationship between our two airlines and demonstrates the confidence we have in Virgin Blue both as an entity and as a partner for Air New Zealand,” Fyfe said.
Virgin Blue CEO John Borghetti welcomed Air New Zealand as a shareholder and said the tie-up with Air New Zealand was a key part of the group's strategy to build an international network, alongside its core local business.
"We see this as an endorsement to our game change program," he said.
Now we will have to wait and see what the ACCC thinks of the move - and whether it will have any influence on the regulator's view of the alliance between the two airlines, an alliance that has already received qualified approval from the ACCC..
3. Govt share change would provide greater liquidity
Air New Zealand says "a change in the Government's shareholding while retaining a majority stake would have no influence on Air New Zealand's business but would provide greater market liquidity for shareholders".
In his first major speech of the year, Prime Minister John Key this morning said the Government is looking at selling some of its existing shares in Air NZ, while maintaining a majority stake.
It is also eyeing partial sales of other key state assets, including the three big energy generators and coal company Solid Energy as it looks to lower its borrowing.
The Government owns 76.5 per cent of Air New Zealand after it bailed the airline out with $885 million of taxpayer money in 2001.
It invested another $149 million in 2004 as part of a rights issue, taking its total investment to $1.03 billion.
Goldman Sachs JBWere aviation analyst Marcus Curley says it had been broadly expected that a partial sell down of the Government's stake in Air NZ would be among the shortlisted assets.
"I don't think the market is going to be hugely surprised with this. What the statement does today is firmly bring it on to the agenda."
Air NZ has poor liquidity for a company with a large market capitalisation, Curley says.
Improved liquidity would attract the attention from investors in New Zealand and overseas.
A counter investment by Air NZ's new Australian alliance partner Virgin Blue does not appear to meet the Government's test of a "widespread and substantial New Zealand ownership", Curley says.
Air New Zealand last week bought a 15 per cent stake in Virgin Blue to gain further exposure to the benefits of their trans-Tasman alliance and possible future cooperation on long haul routes.
Air New Zealand shares were trading at $1.43 this afternoon, down 2c and compared to the Government's average buy-in price of $1.29 each.
The airline paid the Government a dividend of $56.3m last year.
4. Market boosted by aviation sector
Auckland International Airport led gainers on the NZX 50, reaching a 2-½-year high in the wake of its upbeat economic report last week.
Air New Zealand rose after posting a jump in traffic for December.
The NZX 50 rose 5.615, or 0.2 per cent, to 3358, heading for its third daily advance. Trading was quieter than usual, with Wellington market participants away for the anniversary day holiday.
Auckland Airport rose 1.8 per cent to $2.29. The shares reached the highest level since mid-2008, extending their gains since the company released a report showing it may account for almost 20 per cent of national gross domestic product and sustain more three quarters of a million jobs by 2031, based on the flow of freight and passengers through the airport.
Air New Zealand, the national carrier, rose 0.7 per cent to $1.43 after traffic figures showed the airline carried 1,322,000 passengers December, 10 per cent more than the same month a year before.
Load factor rose by 1.3 per cent to 86.3 percent compared to the previous period, with revenue passenger kilometers up 7.7 per cent to 2,861 million.
Much of the increase was built on the back of a 10.9 per cent increase in short haul passenger numbers to 1,140,000, broken down to a 10.7 percent lift in the domestic market and a 13.9 per cent increase in Tasman/Pacific.
APN News & Media, which publishes the New Zealand Herald and operates the Radio Network, was unchanged at $2.40 on the NZX after it said the diversified nature of its operations is likely to offset the effects of Queensland floods, with minimal impact on the bottom line.
The company that said while it expects the Queensland economy to rebound strongly once mop-up operations are complete, advertising revenues from small businesses, retailers and real estate are expected to remain under pressure, having already shown some signs of weakness ahead of the floods.
Hallenstein Glasson Holdings, the clothing retailer, fell 1.2 per cent to $4.05.
New Zealand's retailing sector remains under pressure, with November's core retail sales declining 0.2 per cent to $4.24 billion, the second monthly decline. A gain of 0.5 per cent was expected, based on a Reuters survey.
The New Zealand dollar will probably stay within recent ranges this week as investors prepare for the Reserve Bank to keep interest rates on hold this week.
Five of six economists and strategists in a BusinessDesk survey expect the kiwi will respect recent price-action and stay in the middle of its medium-term range between US74 cents and US76 cents ahead of this week's central bank meetings in New Zealand and the US.
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The lone dissenter expects the kiwi to head lower amid heightened expectations of rising interest rates in China.
Economists expect central bank Governor Alan Bollard will keep the official cash rate at 3 per cent after New Zealand dodged a double-dip recession last year, and last week's benign inflation and tepid retail sales data won't have given him reason to tighten rates early.
Analysts now expect Bollard will start lifting rates in September, with 68 basis points of hikes priced in over the next 12 months, according to the Overnight Index Swap curve.
The kiwi rose to US75.82 cents from US75.46 cents last week.
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