Brierley, which owns 30.3 per cent, has suffered a $NZ324million (A$263 million) paper loss, while Singapore Airlines, with 24.9 per cent, has lost $NZ130 million, according to Singapore analysts.

The Singapore-registered Brierley has 229.5 million A shares (reserved for New Zealanders) in Air New Zealand - 172.1 million on its books at $NZ2.80 and the balance for $NZ1.50. But Air NZ A shares are trading at NZ$47 million after a deal for Singapore Airlines to pay a premium on Air NZ's performance fell through.

When Singapore bought B shares for $NZ3 from Brierley last year it agreed to pay 50c more if Air NZ increased June 2001 earnings before interest, tax, depreciation, amortisation and aircraft rentals by 30 per cent from $NZ1.27 billion to $NZ1.65 billion.

Brierley's problems come on top of its net loss of $US20.8 million ($41 million) for the six months to December 31 - which reflects major problems with Air NZ and James Hardie.

It says it does not expect to post a profit for the full year, given the uncertainty surrounding Air NZ's and Ansett's profitability and James Hardie's plans to take an exceptional loss of $238 million.

Chief executive, Mr Greg Terry, wants to exit Air NZ but there is a catch.

He wants to exit at the appropriate time but will not sell the shares at anywhere near the current price.

Despite the dismal outlook for Air NZ and Ansett, Mr Terry said he was confident Air NZ's new management and strategy, with faster Ansett integration, would lift prospects.

However, those comments were made before the most recent grounding.

Mr Terry says Virgin Blue and Impulse had savaged Ansett rather than Qantas, and that attack continued this week with Virgin receiving the first of 10 new Boeing 737s.

Goldman Sachs doesn't see as rosy a picture, and has graded Air NZ stock.

The West Australian