THE DISTILLERY: Giants are stirring

Floods, BHP Billiton, QR National, Air NZ, Virgin Blue, the pace of the news flow is increasing; it's getting on towards late January and Australian business is slowly awakening from its Christmas New Year torpor and the big wet. Hopefully our still absent jotters (we know your names), will be back on deck giving us their pearls of wisdom soonest. They had better hurry because the summer stand ins, with one headline act, continue to do a pretty good job.

Fairfax's Ian McIlwraith examines the Air NZ raid on Virgin Blue: "The Virgin Blue grab tells us that it takes a decade for bad corporate memories to fade. Air New Zealand's wading in to buy up to 15 per cent of Virgin Blue gives us a precise measure for how long it takes corporate memory and pain to fade – a decade. It was 10 years ago that Air NZ's last Australian airline investment – Ansett – crash-landed in a ball of flaming money and jobs that was erased from the front pages of Australia's media only by the dreadful events of September 11 that year. Ansett's demise nearly claimed Air NZ as well. It teetered on the brink of collapse until propped up by loans and the NZ government taking an equity stake that diluted the substantial holdings of the then Brierley Investments and Singapore Airlines." Ah, 2001, so long ago.

The Australian Financial Review's Chanticleer doesn't like the move, quite rightly: "Air New Zealand's shock raid on the Virgin Blue register is staggering for all the wrong reasons – not the least being that the airline is controlled by the cash-strapped New Zealand government."

The Herald Sun saw another motive in the raid: "The NZ carrier's decision caught Virgin Blue executives and aviation analysts by surprise, with Virgin Blue chief John Borghetti learning of the move late yesterday in a telephone call in which Mr Fyfe made it clear the move was not hostile. However, there was some speculation last night that Air NZ is seeking to block moves by Abu Dhabi-based Etihad, which partners Virgin on the route to London, from taking a controlling stake in Virgin." Bandits at four o'clock?

The floods continue to take their toll on corporates, with QR National 'fessing up yesterday, as the AFR reported: "Coal hauler QR National will take a hit of more than $46 million to its 2011 after-tax profits after the railroad group said the Queensland floods would lower coal volumes." In a bidding war, The Australian upped the possible estimated losses for QR National: "Repairs to the track, reduced revenue from access fees and lower production volumes from coalmine clients could cost the recently listed company over $70 million in lost profits. But the profit downgrade was less extensive than feared and QR National shares rose quickly following the late afternoon release, rising 1 per cent to close at $2.82. QR National floated just two months ago at a listing price of $2.45."

And the AFR said: "BHP Billiton expects the flooding in Queensland to impact its coking coal production, sales and costs for the remainder of the financial year to June 30, after reporting a 30 per cent fall in production in the December quarter." The newly listed Dulux was another to detail the flood impact on its Brisbane plant and country-wide operations.

The Australian's John Durie looked at the latest senior management changes at Telstra in his daylight comment yesterday: "David Thodey's internal revolution aims squarely at an NBN world in which Telstra will use its financial muscle to leverage better networks. This much is already part of his mantra, but it was underlined today with the appointment of former IBM colleague Brendon Riley as chief operations officer. He replaces Mick Rocca, a 43-year company veteran who knows the old copper network better than anyone on the planet, but who will have less to do in an NBN world when Telstra's focus will be on retail sales, not wholesale. The Thodey broom took a while to get working but has now swept aside what was the pre-Sol Trujillo old guard left at Telstra, and installed his own team in place of the two prior regimes – the theory being the new Telstra is focused very much on sales and service with no need to defend the incumbent monopoly." Will the changes improve service?

And Durie also noted this morning, with considerable cynicism, the moans and groan by Woolworths about Bunnings: "Outgoing Goodman Fielder boss Peter Margin, among others, would be amused to learn Woolworths has run to the ACCC complaining about illegal competition from Bunnings. Bunnings has yet to receive notification or discovery notices from the ACCC, but magically the complaints were aired publicly yesterday. They were painted as evidence of concern from Bunnings about Woolies' entry into the home-improvement space. The mere concept of Woolies running to the umpire complaining about cheating from the other side is truly breathtaking." This is a people in glasshouses tossing stones/pots and kettles and the colour black sort of yarn.

Standard & Poor's have issued an updated assessment of the capital strength of some of the world's strongest banks; A big surprise has been the sharp improvement of the standing of our big four, as Business Spectator's Stephen Bartholomeusz writes: "As a system, the Australian banks represent the strongest group within S&P's study, presumably benefitting not only from their relatively strong conventional capital ratios but also from the strength of the domestic economy and their high exposures to low-risk residential mortgages. It would seem S&P has refined its approach to diversification and concentration, with all but ANZ being assigned higher RAC ratios after the diversification and concentration calculations than before them. S&P's analysis supports the view (expressed by APRA and the banks) that the Australian banks will be able to meet the Basel III capital requirements without difficulty."

Andrew, "Twiggy" Forrest is a bit poorer this morning after the company's shares fell yesterday: "Shares in Fortescue Metals Group fell today after a Singaporean sovereign wealth fund offloaded a 4.1 per cent slice of the iron ore miner. Fortescue shares were down 49 cents, or 6.82 per cent, at $6.70 after more than 165 million shares in the Perth-based company changed hands, making it the most traded stock by volume on Thursday. It was also the worst performing stock in the S&P/ASX 50 index. Brokers confirmed that Singapore's Temasek Holdings sold 129 million shares in Fortescue at a price of about $6.82 a share after the Australian stock market closed on Wednesday."

And Fairfax's Ian McIlwraith also looked at the floods: "Devastating floods have given the Prime Minister, Julia Gillard, a strong moral argument to temporarily bump up the royalty taxes on Australia's miners - and she has a live example to follow. Earlier this month, Chile's ''rock star'' mining minister, Laurence Golborne, sufficiently twisted the arms of miners producing more than 90 per cent of his nation's copper (including Australia's own BHP Billiton and Mount Isa's Xstrata) for them to contribute at least $US1 billion in additional royalties to help rebuild his nation after its tragic earthquake in February. Gillard could in fact score more political points by scrapping last year's mish-mash compromise and using the natural disaster as a rationale for getting the reluctant state premiers to cede their royalty rights to Canberra. This could be a comprehensive solution to the country's need to fund a massive, non-optional rebuilding program."