On the eve of the assembly, ANZ found itself struggling to handle the fall-out from an ill-timed profits warning and must have been glad when the event was over. The drama comes as a fitting end to an eventful year for the region in general and ANZ in particular.
This was the year that finally saw ANZ take full control of Australia's Ansett Holdings, fighting off competition from Singapore Airlines (SIA): which then settled on a 25% stake in the New Zealand carrier. ANZ was also among several AAPA member carriers which underwent leadership changes over the year. China Airlines, Thai Airways International, Vietnam Airlines and Qantas Airways all made their way into the New Year with new presidents.
At the same time, the market continued to recover from the 1997 economic crisis. With strong growth returned, carriers are back making optimistic plans for the future. The AAPA reports that revenue passenger traffic for its 18 members grew 12.5% in the nine months through to September. With seat capacity running at only 8%, load factors rose to 75.5%. Freight traffic was also up by double digits for the period.
Although some nations, such as Indonesia, suffered worse than others from the economic crisis and have been slower to recover, virtually all the Asia-Pacific markets have reported growth over the past couple of years. This growth prompts AAPA director general Richard Stirland to brush aside talk of any fundamental change in the market: "With hindsight, the downturn of traffic in 1997-98 was an aberration, and growth rates are stronger now than prior to that episode."
Financial results have also recovered their old form. The AAPA reports that, in the financial year to March 2000, its members returned to a collective operating margin of 5.5% and a net profit of some $2 billion (see table). That, more of less, marks a return to levels before the 1997 crisis.
However, the Auckland meeting was not quite the celebration it might have been, with some unscheduled turbulence still in the air. The delegation from SIA was notably absent, dealing with the ramifications of the October crash in Taipei of a Los Angeles-bound Boeing 747-400.
ANZ too had some uncomfortable moments. Already without a chief executive after the unexpected resignation of Jim McCrea in July, the carrier was forced to issue a controversial profits warning on the eve of the assembly. ANZ cited high fuel costs, the strong US dollar, and strengthened competition in the Australasian market as reasons why earnings would fall short of projections.
The warnings came shortly after a roadshow conducted by the company to raise NZ$284 million ($113 million) to support its purchase of Ansett Australia. The contrast between the bullish outlook presented at the roadshow and subsequent profits warning, almost resulted in a sanction from the New Zealand Securities Commission. In the end, there was no reprimand, but the incident represented a public relations disaster.
Many of the causes behind ANZ's profits warning are a problem for all AAPA carriers - especially the higher fuel prices. Other perennial topics that came under discussion at the assembly included the impact of global aircraft noise regulations, as well as concern over the trend towards "passenger rights" bills led by the USA and Europe.
Liberalisation was also on the agenda. During the meeting Australia and New Zealand announced that they had agreed a long-awaited open-skies air services pact. Five Asia Pacific Economic Co-operation (APEC)forum countries - Brunei, Chile, New Zealand, Singapore and the USA - also initialled the world's first multilateral air pact.
| AAPA member financial results - 1995-2000 | |||||||
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| Financial results ($billion) | 1999/2000 | 1995/2000 | ||||
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| 1995/96 | 1996/97 | 1997/98 | 1998/99 | 1999/2000 | change | Average* |
| Revenues | 51.0 | 52.9 | 52.0 | 43.8 | 50.0 | 14.3% | -0.5% |
| Operating result | 2.7 | 2.1 | 2.1 | 1.0 | 2.7 | N/a | 0.1% |
| Operating margin | 5.4% | 4.0% | 4.1% | 2.2% | 5.5% | 3.3pts | 4.3% |
| Net result | 1.2 | 1.0 | -1.2 | 0.4 | 1.9 | N/a | 12.3% |
| NOTE: *Average annual growth over five year period. Financial years for year to March. | |||||||
Source: Airline Business
