I’m quite concerned about the direction the government’s has taken with Air New Zealand
The letter sent on Friday appears to have been largely missed because everyone’s been focused on the extra loan to the airline.
But the government has announced that they will now be an “active majority shareholder” and they will be "involved in the process leading to board renewal" - which means they want a say in board appointments and they will want a say in businesses decisions.
I can’t tell you how crazy this is. For a number of years now successive governments have operated a hands-off model. They own a majority in companies like this, but they let those companies be run essentially independently.
Because businesses that makes business decisions do well, but businesses that make political decisions do not.
This government has put politics back into Air New Zealand.
So what’s going to happen next time Air New Zealand decides to cut a route, like it cut Paraparaumu and it cut Wanaka, and the locals get upset and the mayor goes on TV?
Does the government allow Air New Zealand to make that decision? Or does it involve itself and force the company to keep the route open even if it’s running at a loss?
In the past, even though the government might have had power to force decisions, it didn’t and we didn’t expect it to. But we might now.
And so now there will be pressure on the government to force Air New Zealand’s hand.
Now here’s the question for you: why would you invest in that company?
48 percent of that airline is owned by shareholders who’ve just had the risk to their investment increase.
The company wants to go to shareholders and the markets and ask for another $1.5 billion at least in further investment in the next five months. Why would you put your money into that when politics is now an increased risk?
And them, is this who it’s going to be for other listed companies the government part own, such as power companies - if power prices are too high and people complain is that a risk to your investment?
I don’t know why the government’s written this letter and has this intention. It could be naivety. It could be its flexing to business to show who is really in charge. It could be that they genuinely believe assets like this should be government–owned
But whatever the reason, this is a bad idea for the government, for Air New Zealand and for shareholders.