HNA Takes A Stake - New Asian Routes to Follow?

[Awesom Andy]

I think juliusg put just about every positive spin you possibly could on this deal in calling JB a genius....

Definitely way too excited there. VA wants to do something NZ doesn't want to be involved in, so NZ has the choice of throwing money into something it doesn't want to do, or cut the losses and invest in something else. It's just another standard everyday business transaction.

 

[medhead]

issuing new shares at a a premium would normally not be called dilutive

I thought that meant that it dilutes the existing holdings. e.g. AirNZ holding ~25 in 100 before new share issue to ~25 in 113 after new share issue

:?:

 

[moa999]

Yes and no. Would normally refer to Earnings per Share dilution where you also need to consider the use of proceeds from the share issuance (eg repaying debt, acquisitions, buying new equipment)..

But yes in a pure technical sense individual shareholding percentage has been reduced

 

[williamsf1]

Borgetthi is a genius. This is the ultimate 'up you' to ANZ, and it keeps him in the driver seat.

I would call him a genius when he gets another 800 mill in the door..... The ship is sinking.... the smart ones have jumped ....

 

[Cryptarcadian]

Applying for capacity doesn't mean using it right away. We could well see a 3/4x weekly flight for both HKG and PEK with a commitment of 1 aircraft before deciding whether to fully utilise the approved capacity.

According to the application, VA says for both routes:

the allocation will be fully utilised by 1 June 2017

Does that mean they're committing to daily flights (using the full capacity) by 1 Jun 2017, but they could commence partial use of the capacity earlier, subject to approval?

 

[woodyren]

I fly to China once or twice or sometimes 3 times a year. We always just purchase the cheapest flight we can on any of the big three Chinese airlines but I have also accumulated a reasonable amount (close to 600K) of Velocity points. Currently I has planned to use them elsewhere and probably still will but I am wondering how this will effect my options.

My inexperienced FF brain tells me that at least now I will be ably to add points accrued on these codeshares that I purchase to Velocity and also that the Velocity points needed for redemptions into Beijing on the code share will be less than the only current option of Singapore Airlines via Singapore.


Are these assumptions reasonable.

 

[Cruiser Elite]

Velocity points needed for redemptions into Beijing on the code share will be less than the only current option of Singapore Airlines via Singapore.


Are these assumptions reasonable.

Clearly we do not know VAs rdpt details as yet but SQ rdpts Oz-China considerably cheaper than CX, CA, MU or any other.

 

[Bolthead]

I fly to China once or twice or sometimes 3 times a year. We always just purchase the cheapest flight we can on any of the big three Chinese airlines but I have also accumulated a reasonable amount (close to 600K) of Velocity points. Currently I has planned to use them elsewhere and probably still will but I am wondering how this will effect my options.

My inexperienced FF brain tells me that at least now I will be ably to add points accrued on these codeshares that I purchase to Velocity and also that the Velocity points needed for redemptions into Beijing on the code share will be less than the only current option of Singapore Airlines via Singapore.

Are these assumptions reasonable.

Too early to tell however I think your assumptions are reasonable. My son lives in China and we also visit regularly however the cities they have been quoting won't help us directly as my son lives in Kunming now. It still means either a flight via SIN or HKG (or I guess PEK). Time will tell...

 

[Bolthead]

I would like to see some uniformity in the international fleet. Because we are leisure travellers these days I am happy to pay for Y+ and then occasionally use points to fly J. If they use the current A330 (which seems to be the main contender) in the fleet it means only 2 class options for these flights. As some have mentioned hopefully they will use 777 or 787 with 3 classes. Irrespective this is a positive move IMHO...

 

[moa999]

And Nanshan Group to take NZs 19.9% stake - also at a substantial premium (and higher than what Hainan paid)
China's Nanshan Group to buy Virgin Australia stake from Air New Zealand | afr.com

Does mean Chinese interests now have one-third of Virgin Australia

 

[williamsf1]

Listened to an extract of a Ticky Fullerton interview with Borghetti and the implication seemed to be that Borghetti has possibly out-maneuvered Loxton and Air NZ. When you think about it, that in the recent past, AirNZ had complained about VA profitability and Borghetti, taken themselves off the board and then put their shares up for sale. So by throwing their toys out of the cot before selling their shares they just invited Borghetti to do a dilutive deal with HNA (in consultation/agreement with EY and SQ) so in the end it appears that AirNZ got totally ambushed at a corporate level.

With todays announcement ... it appears NZ may have the last laugh ... especially if they get 33c a share !!!!! ha ha ha

 

[williamsf1]

Borgetthi is a genius. This is the ultimate 'up you' to ANZ, and it keeps him in the driver seat. It probably also means SQ can't or won't get to 50% and almost certainly will never control VA. Now ANZ have trouble - a capped share price, a certain large loss if they sell down VA, and unwanted competition in the NZ - China routes. VA get a cashed up and motivated investor with a leasing co ready to flip more metal at short notice; and a walk-up start at new routes with solid code shares. They have bridged the gap in their network, produced a strategy, and guaranteed their re-capitalization all in one transaction. Best of all was the smug response yesterday when The Borg said that since ANZ wasn't on the board, the first they knew was the media release.

I think NZ have just given the best reply..... who is smug now ?

 

[davidhes]

Wow NZ really does have the last laugh..

 

[pauly7]

Wow NZ really does have the last laugh..

Oh wow I'd pay to see JB's face right now....
From a selfish point of view pretty disappointing was hoping EY or SQ would just take them over and bring them up to scratch!

 

[Melburnian1]

Do mainland Chinese companies take a 'longer view' on investments than say the Australian sharemarket often does?

The corollary is that Japanese companies have sometimes invested in Oz and eventually pulled out after making a significant loss.

I don't perceive that VA is performing (financially) at all well at present. Could it eventually collapse or are there just too many interested parties (Chinese investors, EY, SQ and the often forgotten residual public investors) for this to occur?

 

[williamsf1]

I don't perceive that VA is performing (financially) at all well at present. Could it eventually collapse or are there just too many interested parties (Chinese investors, EY, SQ and the often forgotten residual public investors) for this to occur?

I don't think they will collapse.... but when your frequent flyer program is valued higher than the airline it supports ( on paper anyway) and various investment bankers comment they need another 800mill in capital investment things don't look good.

 

[Awesom Andy]

they need another 800mill in capital investment things don't look good.

And that's usually not the end of it, as having an extra $800m does not mean that the airline would magically start making money.

 

[eastwest101]

Wow NZ really does have the last laugh..

I don't think the Air New Zealand shareholders will be popping the champagne just yet, according to the AFR and the ABC - Air New Zealand paid about NZ$480 million for the entire 22.5% stake and are now selling 20% back to Nanshan for AU$232 million (which is about NZ$ 243 million by my reckoning) so even allowing for the exchange rate fluctuations and averaging the cost of the shares purhased by NZ it seems they are back down to a 2.5% holding in VA, and have been diluted by the HNA transaction, and have less money than what they put in between 2011 and 2013 - so no - not exactly a massive win for Air New Zealand but it could have been worse.

 

[Melburnian1]

'Australian Financial Review' is reporting a VA announcement to ASX this morning, with the A$852 million capital raising priced at 21 cents a share - significantly less than at what the shares have been trading.

Etihad is not taking up its rights, but everyone else appears to be. Spin is that it is going through 'its Board processes'. No mention of the 13 or so per cent of Virgin Australia Holdings that is held by minority shareholders.

The announcement confirms that it will dispose of all its E190s 'within the next three years' and as also previously stated reduce its ATR fleet by three.

The beancounters have won, because the E190s have an excellent seating configuration.

AirNZ is the big loser from all of this, having sold its shares at a large loss.

 

[pauly7]

'Australian Financial Review' is reporting a VA announcement to ASX this morning, with the A$852 million capital raising priced at 21 cents a share - significantly less than at what the shares have been trading.

Etihad is not taking up its rights, but everyone else appears to be. Spin is that it is going through 'its Board processes'. No mention of the 13 or so per cent of Virgin Australia Holdings that is held by minority shareholders.

The announcement confirms that it will dispose of all its E190s 'within the next three years' and as also previously stated reduce its ATR fleet by three.

The beancounters have won, because the E190s have an excellent seating configuration.

AirNZ is the big loser from all of this, having sold its shares at a large loss.

I think it's a little simplistic to say the beancounters alone won on the E190 decision, it's been well publicised and discussed VA's ongoing issues with this aircraft type from a maintenance and service reliability perspective.