Business wrap: Air NZ to cut 3,500 staff
CEO Greg Foran reveals 3,500 job cuts in plan for 'much smaller airline'; ASB reprieves Smiths City for a month; Abano shares slump as deal cancelled and dental clinics close
'We'll emerge a much smaller airline and could take years to get back to our former size'
Air New Zealand CEO Greg Foran told airpoints customers and staff in an email late on Monday the airline was planning to be a much smaller airline because of the Covid-19 crisis, with just domestic routes and limited international services, which would require it to let go 3,500 of its 12,500 staff in coming months.
Key facts: Foran said Air New Zealand annual revenues had fallen from $5.8b to less than $500m after it cancelled 95 percent of its flights. The airline had a monthly wage bill of $110m and currently had $960m in cash reserves.
Quote du jour: "This has the potential to be catastrophic for our business unless we take some decisive action. The only way we will see an improvement in that revenue estimate this calendar year is if Kiwis embrace domestic travel after the Level Four Alert is lifted. The harsh reality is that most countries will take a cautious approach to allowing international tourism in the next year, New Zealand included."
Under pressure: Furniture and appliance retailer Smiths City said it had started talks with potential strategic investors to support the business through Covid-19. It said ASB had agreed to delay by four weeks the repayment of $1.5 million of the company’s $65 million Senior Secured Facility which was due for repayment today.
Challenging: CEO Roy Campbell said the Covid-19 pandemic was an unprecedented shock to the business and was posing immense challenges. Smiths City shares, which had been in a trading halt since Friday, closed down 42 percent at 10c.
Dropping fast: Shares in Abano Healthcare dropped sharply for a third straight day following the cancellation of a planned private equity takeover and the recent closure of all its Australian and New Zealand dental clinics due to the lockdown.
Nerve struck: Abano shares, which were trading at $5.00 just ten days ago, closed yesterday at a 14-year low of $1.80.
Tough times 1: Hallenstein Glassons reported sales for the six months to 1 February 2020 were $160.27 million, up 5.7 percent from the same period a year ago, while net profit fell 3.8 percent.
Suspended: The clothing retailer announced it had suspended its interim dividend and would reassess the situation at the end of its financial year in August. Its shares fell 6.5 percent to $2.72.
Tough times 2: Skellerup Holdings advised the pandemic meant earnings for the June quarter and full financial year would be lower than the previous year. Its previous guidance was that
As a result the company withdrew its prior guidance that FY20 NPAT would be consistent with the result achieved in the prior period. Its shares fell 6.8 percent to $1.65.
Markets: After falling more than 2 percent at the open, the NZX50 rebounded yesterday to close up 1 percent at 9661. The market was buoyed by export heavyweights Fisher & Paykel Healthcare and A2 Milk Company which are both benefiting from the weaker NZ dollar and increased sales. Their share prices gained 6.6 percent and 2.8 percent respectively.
Still falling: Overnight US crude oil prices fell below $20 for the first time in 18 years, as traders bet production would have to shut to cope with the collapse in demand from the coronavirus pandemic. Crude consumption could fall as much as a quarter in April due to widespread lockdowns across the western world.
Good on ya mate! Seems it takes a crisis for the Aussies to invoke the ANZAC spirit of ‘mateship’, but Prime Minister Scott Morrison has finally yielded to pressure over ex-pat kiwis being able to access unemployment benefits. Announcing the creation of a Jobkeeper support package in last night’s budget, the flat rate payment of $1500 a fortnight will be made available to all employees laid off, including New Zealanders and casuals working for more than one year.
No consenus: It seems US investment banks are divided on the outlook for markets from this point. Strategists at JPMorgan Chase have concluded that most risk assets -- a universe that typically includes stocks and credit -- have seen their low points for the recession that has gripped economies around the world in recent weeks. They believe conditions for market stabilization and revival have largely been met, with recession-like pricing, a reversal in investor positioning and extraordinary fiscal stimulus all now in place.
Goldman Sachs, on the other hand hold the opposite view expecting markets to turn lower again in coming weeks. Other analysts say that its still to early to buy equities, citing reasons including “surprisingly complacent” investor sentiment and historical data showing bear markets almost never end on a single massive sell-off without retesting the bottom. Time will tell which one is right.
Dogs & beers? While animal shelters across the US are closing their doors to the public and cancelling adoption events to slow the spread of coronavirus, nothing is stopping new abandoned animals from coming in, so shelters are trying to place as many animals in homes as quickly as possible which has lead to an unlikely pairing.
DUI dog wallkers: The Midwest Animal Rescue Service has teamed up with Busch Beer to launch the "Foster a Dog, Get Busch" offer. If you are one of the first 500 people to adopt a dog, you receive a $100 pre-paid debit card, which entitles you to three months' worth of beer purchases. We’re sure the SPCA would welcome any offers from NZ brewers keen to try the idea here!
Help us create a sustainable future for independent local journalism
As New Zealand moves from crisis to recovery mode the need to support local industry has been brought into sharp relief.
As our journalists work to ask the hard questions about our recovery, we also look to you, our readers for support. Reader donations are critical to what we do. If you can help us, please click the button to ensure we can continue to provide quality independent journalism you can trust.