Air NZ raising lifts off successfully

Air New Zealand has successfully completed its $185.5 million capital raising, and its new shares are due to start trading on Friday.

With fuel prices falling on world markets and another bumper summer tourist season under way, airline shareholders have responded well to the offer of new shares for $1.30 each.

Air New Zealand shares closed 1c up yesterday at $1.69.

The pro-rata rights issue allowed existing shareholders to subscribe for one new ordinary share for every six shares they already owned.

The Government has extended its financial support for the national carrier, which three years ago was on the brink of bankruptcy, by taking up all its rights for new shares.

As 82 per cent shareholder, the Government has now paid in an extra $150 million. This takes its total contribution to the airline's coffers above the $1 billion mark.

Brett Wilkinson, investment adviser at Direct Broking, said the response to Air New Zealand's rights offer had been "pretty good".

It was not uncommon for rights issues to fall short, with anywhere from 10 per cent to 15 per cent of shareholders not taking up their entitlements.

Of the $35.5 million not coming from the Government, 97.95 per cent came from existing shareholders taking up their one-for-six-rights.

The rest went to shareholders asking to subscribe for more than that basic allocation.

Air New Zealand is using the money raised to reduce its debt levels and to help cushion the effects of its looming investment in new aircraft.

It is spending $1.8 billion on a new fleet of eight Boeing 777-200ER planes to replace its ageing Boeing 767 planes. The first of the new 777s, some of which will be leased, will be delivered in September next year.

The longer range, more fuel efficient aircraft will open new destinations to Air New Zealand, such as Shanghai in China.

Air New Zealand is only the second major airline, after Japan's ANA, to commit to the new Boeing 7E7.

The aircraft, which has yet to go into production, is due to be delivered in 2010.

Another drain on the budget for Air New Zealand next year is a $20 million per plane upgrade of its eight Boeing 747-400 planes.

That will mean new seats, entertainment systems and interiors. 

PLANE SAILING

* Air New Zealand has raised $185.5 million.

* All shareholders were offered the right to buy one new share for every six already owned, at a price of $1.30 each.

* As 82 per cent shareholder, the Government has put $150 million into the capital raising.

* Money raised will be used to reduce debt and help to fund an $1.8 billion investment in new planes.

* New shares allotted: December 8.

* Shareholders' statements mailed out: December 9.

* Trading of new shares on the NZSX and ASX expected to begin: December 10.