Air NZ tipped to play it coy over the details

By ELLEN READ

The impact of soaring oil prices on profit, an update on transtasman plans and information about flagged capital raising will be shared at Air New Zealand's annual meeting today.

Sort of. Precise details are likely to be few and far between but the Christchurch gathering should at least further the company's story by a chapter or two.

Market participants said that with the company's share price under pressure information would be keenly sought. Air NZ shares closed at $1.54 last night, up 1c after falling steadily for some time.

"Because of the uncertainty that's hanging around the stock at the moment, which is not helping the share price at all, this is quite an important meeting," one market insider said.

Last month, the company abandoned plans for an alliance with Qantas when local regulators deemed a tie-up anti-competitive, although it later won Australian approval. The two airlines have said they will look at other ways to co-operate.

" [Air NZ] will probably reiterate their comments they've made publicly, [about possibly sharing parts and maintenance] but it's probably commercially sensitive and subject to negotiation over time so any comments will be general," an analyst said of today's meeting.

"Without seeing what the ground rules for transtasman competition are from an Australian point of view, it's difficult to work out exactly what you can have a go at on this side of the Tasman."

It's an important meeting nonetheless as Air NZ has a major funding requirement looming for a fleet rebuild - so the market will be searching for details on the capital raising already flagged.

The company would not confirm if details of an expected $200 million rights issue would be disclosed today.

What is likely though is the latest quarterly hedging statement, indicating how the company is tracking in this financial year and how sky-high oil prices are affecting profitability.

Air NZ reported a 10 per cent increase in pretax profit (before unusuals) to $234.7 million for fiscal 2004. In August, concerned at growing competition on several key routes and high fuel prices, the company said it would be challenging to manage a repeat performance.

A second strategist said: "There is no earnings guidance out there, except that [Air NZ] regard the environment is 'challenging' so I'd expect them to at least discuss those issues, given all the uncertainty around fuel and transtasman.

"It's a logical time for them to give a first-quarter trading update given that that period's complete."