The fate that is about to befall Ansett is not unlike most aviation disasters; a combination of a number of significant mistakes, each in isolation non-life threatening, but in combination, nearly always fatal.
Following the deregulation of the Australian aviation industry Ansett continued to be run as a personal fiefdom of the let Sir Peter Abeles of TNT. News Corp took a back seat. Both lived off the cash flow and re-invested nought back into the business. The balance sheet went to hell in a hand basket. In the meantime Qantas and Australian Airlines came together and put together a decent balance sheet and built the synergy between domestic and international that today includes the alliance with BA.
In the meantime, Ansett struggled to append a few international routes to its shrinking domestic business and ever thinning margins.
TNT exited via AirNZ while NewsCorp remained locked in via the foreign ownership regs.
In the late 90's the most sensible option was for NewsCorp to exit by selling their 50% to SQ. The balance sheet maintenance and investment required to rapidly restore Ansett was beyond the means of AirNZ even as far back as 1997/98.
This position was strongly pushed by Ansett management as the only realistic option that would guarantee Ansett a future.
Unfortunately pride always comes before a fall.
Over the Tasman, Air NZ in the form of Sir Selwyn Cushing and major shareholders Brierly Investments were in no mood to write down the value of their 50% of Ansett.This would surely be required should the other 50% go to SQ at a substantial discount to the cost of their already held 50% which had been bought from TNT some years earlier.
AirNZ then exercised it's pre-emptive rights over the NewsCorp 50% of Ansett. This was a classic mistake of biting off more than they could chew to maintain a seat at the big table in the Asia-Pacific aviation market.Pride more than anything else would not let Sir Selwyn and his board do anything else.
They thought they could have their kayak and heat it too.
Even in ideal weather this was never going to work.
Then a number of other circuit breakers all started popping at the same time.
With the addition of Impulse and Virgin Blue
to the domestic main east coast trunk routes and the rapid increase in the price of avgas , Ansett's balance sheet was further shredded in a matter of 12 months.
Then the two grounding episodes.. and it was all over.
Air NZ has it's own set of very serious problems which precluded them from fixing Ansett two years ago and most certainly at this point in time. Their major shareholder Brierly Investments is cash strapped and has no intention of increasing exposure (this shareholding is more debt dressed up as equity). SQ now in for 25% is looking down the barrel of a write-off in AirNZ and quite sensibly is not interested in buying into the mud-slinging and duck shoving that will now intensify between the unholy set of "stakeholders" that includes the NZ Government, the Australian Government and the major shareholders...and of course our friends the banks.
As surely as pride contributed significantly to the current situation you can be equally sure it will preclude a sensible solution.
The dye is cast.The finger pointing has commenced in earnest.
The vultures will have a good dinner. Everyone else will be 4Q'd.
Not cut and paste FWIW.