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Joined: Sun Mar 25, 2001 4:32 am

News: Hope Fades For AirNZ Rescue

Sun Sep 23, 2001 12:30 pm

This article was published in the Sunday Star times today.


23 September 2001


Last-ditch efforts to save Air New Zealand appear to have failed. Sources told the Sunday Star-Times the airline could be placed in statutory management as early as this week as negotiations to save the ailing airline get grittier.

Under statutory management, the government would appoint a manager to sell the airline, keeping it flying in the meantime.

It is understood that at a crisis board meeting last Friday, acting Air New Zealand chairman Jim Farmer told the airline's major shareholders - Brierley Investments and Singapore Airlines - unless they committed to a bail-out, the government would put the national carrier in statutory management this week.

The Star-Times understands Singapore Airlines wants due diligence finished before committing, which could take weeks.

Statutory management is invoked when it is in the country's interest. In this case, that means preventing Air New Zealand from being grounded because of the ramifications for the economy, including tourism - now our second largest source of foreign income.

The government appoints a statutory manager and guarantees liabilities to allow the airline to fly while a sale is negotiated. The government would reach an understanding with the airline's dozen or so financial backers to prevent them seizing the airline's assets.

One source said: "Politically they don't have a choice. We don't have the luxury of another national carrier like Australia did when Ansett fell over. Just imagine what would happen to the economy if we didn't have an airline. We'd be cut off from the rest of the world, our time-senstive exports would grind to a halt and our domestic and international tourism suffers. It would be a disaster."

Analysts said if Qantas bought Air New Zealand, the government would allow Virgin Blue to fly trans-Tasman and within New Zealand. United could also be interested but the global aviation crisis caused by the US terrorist attacks meant its attention was elsewhere. Air New Zealand has 10,000 staff worldwide and the impact on them would depend on who bought the airline.

The news could also be bad for mum and dad shareholders as no company in Kiwi corporate history had traded out of statutory management. If a buyer paid a minimal price for the airline, shareholders would lose their nest eggs.

There is doubt the proposed bail-out - $150m each from Singapore Airlines and Brierley and a $550m loan guarantee from the government - would be enough to rescue Air New Zealand and Singapore Airlines does not want to pump more money into the airline.

Analysts figures show at least another half billion dollars would be required in the next 18 months to save the airline.

Under the proposed bail-out, BIL's stake would rise to 37% from 30% and Singapore Airlines' would increase from 25% to 35%. However, if the Air New Zealand share price keeps trading at current lows, Singapore Airlines would pay just $80m to get to a 35% stake, which the government reportedly does not want it to exceed.

If the figures do not add up, sources suggest Singapore Airlines could walk away from Air New Zealand, believing it could do no more, effectively writing off its more than half a billion dollar investment.

Analysts believe Qantas Airways would be the most likely buyer of an Air New Zealand in statutory management.

"They could save $300m a year in synergies between the airlines so they could buy Air New Zealand for say $1, take on all its liabilities and make money within a short time," said one source. "But it wouldn't be Air New Zealand any more. It's more likely to be Air Tasmania or something."

Sources said the Singaporeans were angry the government and Air New Zealand were blaming it for contributing to the airline's failure.

Singapore Airlines was also unhappy Finance Minister Michael Cullen claimed it had blocked moves by the government to take a stake in Air New Zealand. And Singapore Airlines could not be blamed for sticking to the memorandum of understanding after it discovered the state of the finances and the share price had dropped so low, the source said.

Another source said the working relationship between them, the government and Air New Zealand was so poisoned it was beyond redemption.

Sources said the figures did not stack up for Singapore Airlines to pump more into Air New Zealand. The airline has already injected $520m: paying Brierley's $284m for a 16.7% stake, buying an 8.3% stake on market for $141m, and taking part in a three for one rights issue last November which cost it $95m. At Friday's close its stake was worth about $49m.

If Air New Zealand did need another $500m to survive, Singapore Airline's share of that would be $175m as a 35% stakeholder. "It's a bottomless pit. If you were a good businessman you'd have to sit back and wonder whether to put that money into its existing successful, well-run and profitable organisation or dump it in Air New Zealand," said a source.

The government's negotiating team, headed by Rob Cameron, met over the weekend but he declined to comment, as did Air New Zealand.

This month, Air New Zealand announced a record loss of $1.4b after writing down $1.3b in Ansett, which had been bleeding more than $1m a day before being grounded on September 14.

If this does happen it is truly a sad time for aviation in Australasia and for both the New Zealand and Australian industries.


RE: News: Hope Fades For AirNZ Rescue

Sun Sep 23, 2001 12:31 pm

Indeed, this is sad!  Sad
Posts: 457
Joined: Fri Jul 27, 2001 11:36 pm

RE: News: Hope Fades For AirNZ Rescue

Sun Sep 23, 2001 3:16 pm

They had this coming.... and hopefully it does.

They worked so hard to prevent Qantas from coming even bigger, in the end they might have just made it huge. Actually they already have.

RE: News: Hope Fades For AirNZ Rescue

Sun Sep 23, 2001 3:17 pm


I am not going to gloat about Air NZ's immenant demise. But what the hell were those board members doing? It's truly shocking what has happened at AN but what about the people who face losing their jobs in New Zealand?

This whole thing keeps getting worse and worse.

Posts: 2310
Joined: Tue Jan 09, 2001 12:03 pm

RE: News: Hope Fades For AirNZ Rescue

Sun Sep 23, 2001 3:21 pm

I wouldn't be too worried about what the media's saying at this stage  Smile
Posts: 2310
Joined: Sat Oct 21, 2000 6:00 pm

RE: News: Hope Fades For AirNZ Rescue

Sun Sep 23, 2001 6:47 pm

Agreed TG992,
And Mx5_boy, i would now like to thankyou for what you have said in your post. You are truly an amazing character.
First you support AN with all your might!! And i myself do aswell. (Though in the eyes of a New Zealander, i donot say that it is all AirNZ's fault)/
And secondly, for now seeing that if AirNZ goes under, there will be more heartack and anguish over the tasman!!

Posts: 585
Joined: Mon Jan 15, 2001 8:30 pm

RE: News: Hope Fades For AirNZ Rescue

Sun Sep 23, 2001 9:58 pm

All I can say is what goes around comes around.

If Air NZ had just shut up & let SQ purchase 50% of AN a few months back things would have been different!

I'm one totally p'd off Ansett Australia fan.
Posts: 457
Joined: Fri Jul 27, 2001 11:36 pm

RE: News: Hope Fades For AirNZ Rescue

Sun Sep 23, 2001 10:03 pm

SAME here! I just saw something saying it took 65 years to build Ansett into the great airline that it was.... and it took Air New Zealand 1 year to destroy that!

And more to the point why have none of the directors i.e. TOOMEY been sacked for this? I mean surely if I ran your business into over a one billion dollar debt the first thing you would do would be to kill me or sack me!

go canada!
Posts: 2886
Joined: Wed Jun 06, 2001 1:33 am

RE: News: Hope Fades For AirNZ Rescue

Mon Sep 24, 2001 12:10 am

Qantas Qantas Qantas!

buying anz when in management will sve a lot of problesm, anz will get a new owner, ti can also mean ansett can be picked up by sia if its desperate or most can be sold to virgin blue.

If anz does go i will fall of my chair in mass hysterics, please dont think i dont feel bad for the employeees i hav idea what they must be feelign but because it shows that helen clarke is a stupid women andthat qantas were right after all.

Qantas Qantas Qantas!
It is amazing what can be accomplised when nobody takes the credit
Posts: 1294
Joined: Sun Mar 25, 2001 4:32 am

RE: News: Hope Fades For AirNZ Rescue

Mon Sep 24, 2001 1:34 am

Todays (Mon) Sydney Morning Herald:

Qantas the big winner as rivals crumble
By Brad Norington and Darren Goodsir

Qantas has strengthened its position as the long-term winner from Ansett's collapse with the Howard Government admitting it expects the airline still to have 70 per cent of Australia's aviation market in a year.

There were also strong signs last night that Ansett's troubled owner, Air New Zealand, was about to be put in the hands of an administrator after its two main shareholders refused to inject more funds.

The shareholders, Singapore Airlines and Brierley Investments, had serious doubts that a $NZ850 million refinancing package would be enough to save it, sources said.

The prospect of Air New Zealand joining Ansett in voluntary administration makes it even less likely that Ansett's creditors, including 16,000 staff owed more than $500 million, will receive funds from the Kiwi parent.

The collapse of Air New Zealand would play further into Qantas's hands and could see it extending its market even further, across the Tasman.

The Deputy Prime Minister, Mr Anderson, admitted yesterday that Qantas's near domestic monopoly might continue indefinitely, with other airlines, including Virgin Blue, eventually controlling 30 to 35 per cent.

His comments came amid new delays making it likely that no Ansett aircraft would be flying until Wednesday.

Ansett's administrator, Mr Mark Mentha, confirmed yesterday that five serious bidders were interested in Ansett's assets. He also announced the sale of Ansett's travel agency business, Traveland, and further sales are pending for Skywest and Hazelton.

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