Air NZ in 3pc shares buyback
Airline says the shares are below fair value because of optimistic forecasts, reports Tamlyn Stewart.
AIR New Zealand has told shareholders it is on track to more than double the $91 million in normalised earnings before tax the company reported for 2012 in the year ahead.
The company’s share value rallied more than 5 per cent yesterday after it announced plans to buy back 3 per cent of its shares, saying they were trading below fair value.
Chairman John Palmer told shareholders at the airline’s annual meeting in Christchurch that its target was looking achievable in spite of elevated fuel prices and other airlines projecting weaker performances.
Air New Zealand first made the forecast when it announced its annual result last month.
‘‘Clearly we operate in a volatile industry with certain variables beyond our control,’’ Palmer said.
‘‘However, three months into the 2013 financial year, we believe we are well placed to deliver that result.’’
For that reason the company considered its current share price to be below fair value, and announced it intended to buy back 3 per cent of its own shares.
The Government, which holds 73 per cent of the stock, will not sell.
The share buyback may start from October 4 and run until September 27 2013.
Air NZ stock
gained
5.45
per cent, or 6 cents a share, to close at $1.16 a share yesterday.
Outgoing chief executive Rob Fyfe said the airline was well posi- tioned to deliver formance.
‘‘We now live in, and plan for, an environment where jet fuel prices remain elevated and we are confident we have the fleet strategy, the network strategy, the product strategy . . . to deliver far improved financial performance, notwithstanding these fuel prices,’’ Fyfe said..
‘‘The days when we could count on steady growth in the world’s developed economies may not return anytime soon.’’
The airline would continue to protect its market position and expected to offer more than a million fares under $100 during the course of this year in grabaseat deals and standby fares.
Its alliance with Virgin Australia was proving a ‘‘strong success’’ with significant growth in combined market share, and membership of its airpoints loyalty
improved
per- scheme grew 19 per cent in year to 1.2 million members.
Air New Zealand, which employs nearly 2000 people in Christchurch, had prioritised its response to the earthquakes, maintaining capacity ahead of demand and continuing with promotional
the and pricing strategies to stimulate demand. Asked whether the airline would consider reinstating its Christchurch to Los Angeles route, Fyfe said the company had ‘‘no immediate plans’’ to do so as it had not been satisfied with the level of demand for that route.
Yesterday’s meeting was Fyfe’s last after seven years at the helm and there was a lot of love in the air as the board and shareholders paid tribute to him.
Palmer described Fyfe’s ‘‘wellreasoned and researched initiatives, well communicated ideas and vision, determination to improve outcomes, and above all, trusting and encouraging people to go above and beyond in their daily activities’’.
‘‘Rob’s legacy will be the strong business he leaves behind, and the special culture he has instilled throughout all levels of the organisation.