I think this article from Today's Age is pretty much on the ball.
Battle of the skies has just begun
By LEONIE WOOD
Friday 5 October 2001
A week ago, Ansett's administrators were staring at a near-hopeless task. Faced with a rapidly shrinking assets base and a mounting pile of claims from creditors, their only option was to get some planes flying again to generate cash flow.
They scraped together a toy fleet, comprising just four planes and one on standby, to ply the skies between Melbourne and Sydney. Budget class, armed only with water bottles and big smiles, the tiny outfit looked embarrassingly naive.
Ansett Kick-Start still struggles to lure passengers, and it faces relentless - indeed, ruthless - pricing competition from the dominant Qantas.
Ansett's administrators, Mark Mentha and Mark Korda of accounting firm Andersen, may breathe a little easier this week. But in truth, the hard work starts now.
The Andersen team now has $150million to build a new airline - Virgin Blue started with much less - but is about to begin negotiations with a range of vested interests that will want to extract as much value as they can from the fragile little airline.
The administrators yesterday confirmed they are trying to get Singapore Airlines to commit to a management contract and an equity stake in the new business. But Singapore Airlines will also want some hard deals struck with the unions.
Having wasted $400million in Air New Zealand, Singapore Airlines will be anxious to retrieve big licks of value out of Ansett, and that will require big cuts to costs, particularly labor costs.
Singapore Airlines was always a logical participant in a rejuvenated Ansett. A natural rival of Qantas in international aviation markets, particularly on routes between Australia and Asia, Singapore Airlines needed Ansett to deliver passengers into its own airline network.
When Ansett collapsed, the collateral damage was perhaps not immediately apparent. Members of the Star Alliance frequent flyers program, who would normally travel with Singapore Airlines or other program partners, no longer had any reason to stick with these airlines.
The market was wide open to Qantas, which promptly and effortlessly vacuumed up domestic passengers and international passengers into its planes, so destroying any value the overseas airlines had invested in the Australasian sector.
So Singapore Airlines is carrying the hopes of Star Alliance airline partners. That makes its negotiating position a little firmer if, as is suspected, some of these airlines prove to be interested in buying a stake in Ansett Mark II.
Australia is a crucial growth market in an aviation industry beset by chaos and crisis. For Singapore Airlines, it is an alternative source of revenue when its own international routes are being cut back.
Several considerable risks remain, not the least being Qantas and the uncertainty of the domestic economy: corporate spending has contracted sharply since the terrorist attacks in the United States.
The Air New Zealand settlement proceeds have bought the Ansett administrators time, credible managers and a capital base. So yes, out of the ashes, against all odds, Ansett Mark II will fly again one day. But its ultimate success hinges on getting passengers aboard and safely buckled up.