By FRAN O'SULLIVAN assistant editor
The Government is poised to take a major interest in Air New Zealand as a plan to keep the airline's bankers at bay is finalised.
Air New Zealand lawyers worked through the weekend to get the new bailout plan in place for an expected board meeting later this afternoon.
The airline's management, under chief executive Gary Toomey, is also preparing a new business plan which is expected to result in a big trim of the management team.
Rationalisation of provincial airlines and a focus on route profitability are also expected.
Among issues which have been discussed is a banking moratorium or rescheduling of loan repayments to ease the company's financial plight.
The airline's lawyers have had to draft a new shareholders' agreement and amendments to Air New Zealand's constitution so that two classes of shares (resident and foreign-owned) can be abolished.
If all goes to plan, Air New Zealand's directors will approve the bailout today, otherwise the airline's shares will remain suspended from trading until a comprehensive package is disclosed.
The recapitalisation is expected to be well in excess of the $850 million indicated when the company revealed a record $1. 4 billion loss on September 13.
The $850 million figure had been estimated before the terrorist attacks in the United States. The fallout, especially a fear of flying by many people, has destroyed global airline profitability.
Analysts predicted that the Government would have to contribute up to $1 billion - either through a direct equity stake or by underwriting a capital-raising exercise - to the new rescue package.
A $550 million loan the Government had earlier indicated it would commit as part of the $850 million rescue would have produced a big drag on profitability. The collapse in global aviation profitability means that the previous commitment by Air New Zealand's major shareholders, Singapore Airlines and Brierley Investments, to commit a further $150 million each in new capital would not provide sufficient new equity to get the airline out of trouble.
The Air New Zealand recapitalisation plan will have to be approved by the airline's shareholders.
On Friday, the airline requested that its shares be suspended from the New Zealand Stock Exchange until the rescue plan was finalised and announced.
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Govt ready to ride to Air NZ's rescue
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