2 Cheap Cars to sell 10% stake in Kiwi Regional Airlines

Kiwi Regional Airlines avatar of a SAAB 340 34-seater aircraft mock-up.

2 Cheap Cars, which has built a nationwide chain of auto yards selling used imports since starting four years ago, is looking to sell its stake in Kiwi Regional Airlines, which is run by the founder of failed mid-1990s operator Kiwi Travel International Airlines.

The car reseller today said it wants to sell its 10.4 percent holding in the airline, and that it "never intended to be a long-term investor." When it first invested last December, the company said it was "joining a consortium", with chief executive Eugene Williams appointed to the airline's board.

Companies Office documents show the company initially owned 23 percent of the airline, but its shareholding was diluted in July, August and again earlier this month when Kiwi Regional Airlines issued more shares.

"When we first got involved the airline didn't have any other investors," Williams said. "We were pleased to help at the entrepreneurial level and play a part in getting it underway. Now with CAA certification, an aircraft and a growing passenger list it is a great time for others to come on board."

There are currently four other investors: Nicole and Guy Domett, former directors and shareholders of the New Zealand School of Tourism, who each individually own 33 percent; Ewan Wilson, the company's founder and director, who owns 20.3 percent; and William Wilson, with 4.2 percent.

Kiwi Regional Airlines was set up by Ewan Wilson in December 2014, after Air New Zealand announced it was abandoning services from Auckland to Kaitaia and Whakatane, Wellington to Whangarei, Taupo and Westport, and the Palmerston North to Nelson service in April 2015. 2 Cheap Cars was the first investor, and at the time, Williams told BusinessDesk his role would be "giving advice on marketing."

Wilson was banned from being a director for five years over his fraud convictions following the collapse of Hamilton-based Kiwi Air in 1996. That airline struggled under the weight of competition from Air New Zealand subsidiaries Freedom Air, now defunct, and Mt Cook Airlines, and logistical problems created by his leased aircraft being too often fog-bound at Hamilton airport.

In July, 2 Cheap Cars sent out a press release stating it had purchased a a Saab 340A aircraft "through its subsidiary, Kiwi Regional Airlines." At the time, Wilson said Kiwi Regional Airlines "categorically" owned the aircraft, and at the next shareholder meeting, there would be a "clarification of who speaks for the company."

The airline said it received its air operator certificate from the Civil Aviation Authority on Oct. 23 this year, and began flying on Oct. 27 this year, with direct flights between Dunedin and Queenstown, Dunedin and Nelson, and Nelson and Hamilton. This month it said it would start flying directly from Nelson to Tauranga twice a week.

At the end of November, one month after flights began, the company cancelled its Dunedin-Queenstown route due to "a combination of several weather-related cancellations and low passenger bookings making it unsustainable for this service to continue."

In today's press release, 2 Cheap's Williams said the company now had 15 retail outlets throughout New Zealand, having added five this year, and expects to have sold more than 10,000 vehicles this year.