Ansett employees wait and wonder
By LEONIE WOOD
Saturday 27 October 2001
The deadline for accepting voluntary redundancies at Ansett passed yesterday.
And unless there is clarification soon from the government, the airline's employees - who have not been paid for more than five weeks - may get loud and rowdy in the last week or so of the election campaign.
This is not a pleasant prospect for either political party - workers demanding that someone carve out hundreds of million of dollars from a dwindling budget surplus.
Despite posturing by all sides, Ansett's administrators do not have a formal offer on the table that might get an early payment to employees or other creditors.
There is nothing from the Federal Government, nor from magnates Lindsay Fox and Solomon Lew, nor from the much-touted, unfunded ANstaff group, nor from other smokey bidders.
Regardless of bulging pockets or bulging ambition, no bidder will touch Ansett until the issue of who pays the employee entitlements is resolved. Right now, the Federal Government's commitment to pay $195million topped up by, say, $35million from the administrators' kitty, falls well short of what is needed.
Mr Fox and Mr Lew would like many people to think they are the "only game in town" when it comes to buying Ansett. In the same way, administrators Mark Mentha and Mark Korda would like Ansett's unions to believe they are juggling several other options.
Mr Fox and Mr Lew plan to make a formal bid for Ansett within two weeks, which could force Ansett's administrators to hold an early meeting of creditors, the biggest single bloc of whom are Ansett employees. The administrators would be forced to recommend the Fox/Lew plan or something else.
What that "something else" might be has not been formulated, just as Mr Fox and Mr Lew have not finalised their proposal. Other bidders may emerge, but employees want payments quickly.
Certainly Mr Fox and Mr Lew are the most public - and may be the only credible - bidders prepared to buy 100 per cent of a company that would operate Ansett's intercapital services. The investment would be substantial - not, as was reported yesterday, a paltry $50 million to gain income from some properties.
Mr Fox and Mr Lew also plan to take up minority stakes in each of the regional airlines.
The Fox/Lew investment would have an enterprise value of between $800 million and $1billion. This is expected to deliver the administrators substantial cash, although certainly not enough to repay creditors in full. The Fox/Lew group will also assume some of Ansett's existing liabilities.
Hours before the Fox/Lew bid was unveiled at an extravagant press conference, Singapore Airlines declared it was not bidding for Ansett, a curious statement that on face value appeared to strip the Ansett bidding field to one. But there is more to Singapore Airlines' involvement.
Singapore Airlines, indeed, is not bidding. But it is in the gun seat. Singapore Airlines is now the consultant advising the administrators how to run Ansett, and it is a fair bet that Singapore Airlines will be formulating a structure that benefits its position as an inter-national carrier with substantial interests in Australia. Singapore Airlines is biding its time - sizing up the viability of a potential Ansett Mark II, determining the value of residual assets, and trying to work out what the competitive structure of the domestic aviation business might be, say, two years from now.
With its balance sheet damaged by writedowns against its failed Air NZ investment, and its income curtailed by the global slump in passengers, Singapore Airlines has no intention just now of injecting fresh capital into anything. Instead it wants an anchor stake in Ansett earned, say, in lieu of management fees.
But all that could change. From its inside position at Ansett, Singapore Airlines may decide that an investment in Australia is better than standing by as its international returns shrink.
The Age Company Ltd 2001
I certainly hope that the Buyer will have Ansett remain as a full-service carrier, rather than a low cost carrier. Who will get the bid? Lufthansa (If they are part of it)? Or ANStaff?
Is Lufthansa likely to go for Ansett Australia?