PAUL PHELAN / CAIRNS
Joint rescue package on hold because of threat of possible Australian legal action
Air New Zealand's (ANZ)two major shareholders and the New Zealand Government are battling to prevent the carrier following its Ansett Australia subsidiary into liquidation. ANZ's future now hinges on whether as the parent company it can be held liable for Ansett's debts.
A NZ$850 million ($360 million) ANZ rescue package depended on cash injections of NZ$150 million each by major shareholders Brierley Investments and Singapore Airlines (SIA), supported by a NZ$550 million loan facility from the New Zealand Government. However, the proposal is on hold because of possible Australian Government legal action that may expose ANZ funds to Ansett creditors if the the carrier is found to have traded while insolvent.
The ANZ rescue plan may be too late as due diligence will take four to six weeks, says New Zealand's finance minister Michael Cullen.
Prime minister Helen Clark adds that if it does go ahead, the government loan could be converted to shares if the outlook worsens. Cullen says SIA - majority owned by the Singapore Government - and Brierley Investments, opposed a direct New Zealand Government equity stake during the rescue package negotiations.
The government's alternative is to put ANZ into statutory management if it fails to trade out of its predicament, but Cullen warns that in that scenario ANZ's assets, including its aircraft, "could be seized [by creditors] while they are overseas".
ANZ's share price plunged to NZ$0.26, compared with the NZ$1.31 SIA offered inAugust. Government sources were openly discussing ANZ going into "statutory management" last week and the ANZ board was expected to decide on this by 21 September.
Ansett administrator Pricewater-houseCoopers (PWC) resigned last week while negotiating with potential buyers, and was replaced by Arthur Andersen, stalling the talks. PWC had been about to serve demands on ANZ for a further A$380 million ($196million)with court action to follow, but said its resignation followed a lack of union support.
Hopes of a takeover-led Ansett revival are fading, with the likely sale of the carrier's assets in smaller packages as going concerns more likely. Ansett's debt is estimated at A$2 billion to A$4 billion, including about A$500 million in employee entitlements. No viable plan to revive Ansett as an entity has emerged.
Qantas is to wet-lease 10 Ansett Airbus A320s and had proposed a deal to take nine Hazelton Airlines Saab 340s for regional services.
Under Qantas' plan, around 1,500 Ansett pilots, flight attendants and ground handling staff would be re-engaged and significant numbers of Qantas aircraft would be redirected from overseas destinations affected by the US terrorist attacks. British Airways would fly some overseas services for Qantas on a short-term basis.
Qantas chief executive Geoff Dixon says the plan would increase the carrier's domestic capacity by half, allowing it to carry all its own passengers and 80% of those who travelled with Ansett.
Source: Flight International
