KEY POINTS:
It is remarkable that on Wednesday, when world stock markets were plunging, shares in Air New Zealand hit their highest level since the September 11 terrorist attacks.
This was testament to the extraordinary job Rob Fyfe and Ralph Norris before him have done in turning the airline around and the strong half-year result Fyfe reported the day before.
That Air New Zealand had such a healthy balance sheet that it was able to return capital to shareholders by way of a 10c special dividend would have seemed like an impossible dream four or five years earlier.
At that point, the airline was reeling from the twin shocks of the terrorist attacks and the collapse of Ansett, its ill-advised foray into Australia.
When Norris came in as chief executive in 2001, he inherited an airline that was on the verge of bankruptcy.
After a $1 billion cash injection from the Government, Norris overhauled the airline.
He and Fyfe set about stripping costs by reducing the maintenance bill and moving most of the sales on to the internet.
This has been a huge success. Compared with 2002, the airline has been able to reduce costs excluding fuel by 3 per cent while at the same time increasing capacity - available seat kilometres - by 19 per cent. This is no small achievement in the difficult environment that followed September 11.
But cost-cutting is only half the story.
It has also been matched by investment and a rethink of all the airline's routes and services.
Norris decided Air New Zealand could no longer be all things to all people. He turned the airline into a no-frills carrier around New Zealand and across the Tasman, while remaining a full-service international airline.
Fyfe cut unprofitable routes to Singapore, Taipei and Nagoya and introduced routes to Shanghai and from Hong Kong to London, which have more growth potential.
The airline also improved its long-haul offering - where it had been a long way behind its competitors - refurbishing its ageing Boeing 747 fleet and buying eight 777s.
These improvements are starting to bear fruit, with the airline able to offer better services in the front end of the plane than most of its competitors. And it will take other carriers a couple of years to catch up.
All this change culminated in Tuesday's strong half-year earnings, when the airline reported a 12 per cent rise in operating revenue and a 61 per cent rise in net profit to $74 million, and said the rest of the year would also be strong.
There's no denying that Air New Zealand has had a bit of help.
Global aviation is currently in what is referred to as a "sweet spot", high oil prices notwithstanding. Ironically, this has a lot to do with the 2001 terrorist attacks, which put such a dampener on air travel that most airlines stopped ordering new planes. And with the two-year delay Airbus has had delivering its new A380s, there's been very little new airline capacity added since 2001.
So with a strong global economy increasing demand for air travel but with no corresponding increase in seats, profits were sure to rise.
But aviation is a highly cyclical industry and the sweet spot will last for only another couple of years. Boeing and Airbus both have strong forward order books, and Airbus looks as if it's slowly getting its house in order.
Fierce competition will return to the aviation sector as airlines slash fares. And even if fuel prices have dropped by then, many of the savings are likely to be passed on to consumers if competition heats up.
The squeeze will go back on to aviation, but Air New Zealand has shown how resilient it is to adverse conditions and how quickly it can adapt.
Sale Goes West
It seems the sale of CanWest MediaWorks is not progressing as its Canadian owners had been hoping.
Indicative bids for the TV and radio company - which is majority-owned by CanWest Global Communications - closed on Wednesday and are said to be underwhelming.
Australia's Macquarie Media is understood to be the front runner and to have offered $2.20 to $2.25 a share, as against yesterday's share price of $2.20 (though to put that in perspective, CanWest shares are up from around $1.30 six months ago on hopes of a good sale).
Small Australian radio owner Austereo may be having a look, but there aren't thought to be any other media companies interested in the asset, which leaves a handful of private equity firms.
And while the private equity fellows have a reputation for buying anything that moves, they're being a bit more circumspect about this one. Indeed, most had a look at the business and passed a few years ago, which is how MediaWorks came to float on the NZX in 2003.
As one half of a profitable duopoly, MediaWorks' radio business is considered to be quite a prize. The problem is that it comes with the TV3 and C4 TV networks, which aren't so profitable.
Whether a sale goes ahead will depend on how desperate CanWest Global is for cash to fund its purchase of film and television producer and distributor AllianceAtlantis.
Stuck In The Mud
Every day the world speeds up a little bit more. Technological advancements mean that communication is even faster and decision-making becomes even more instantaneous.
But not at the Commerce Commission.
The competition watchdog this week said it was delaying its decision on whether to let Woolworths and Foodstuffs acquire The Warehouse until the end of March.
They are indeed complex issues that the commission has to rule on. But in the meantime The Warehouse, its shareholders, Woolworths New Zealand and Foodstuffs are stuck in a stalemate.
