Past Government assistance.

[markontop]

In the 90’s did the Government assist QF with the float to make it attractive?
Ansett folded in part due to the Government (Mr. Anderson)blocking Singapore’s assistance. This saved VB.
So you all been helped in the past.

[Lookleft]

Ansett folded in part due to the Government (Mr. Anderson)blocking Singapore’s assistance.

Just to clarify, which government and what assistance are you referring to?

[junior.VH-LFA]

It was also owned by the government then.. not a private enterprise. That's a pretty significant and crucial point, wouldn't you say?

[Section28- BE]

"Just to clarify, which government and what assistance are you referring to?"

Look- I reckon, The News stake in AN going direct to SIA, and hence had to go ANZ....???

Rgds
S28- BE

[DanV2]

Look- I reckon, The News stake in AN going direct to SIA, and hence had to go ANZ....???

Rgds
S28- BE

Air New Zealand used their veto rights to block SIA from acquiring 50% of Ansett the first time around. The government had nothing to do with SIA buying Ansett the first time around.

NZ used their veto (acquired from when they purchased the first 50% from TNT) so they can fully own Ansett, despite fully knowing they had a "crap" balance sheet to fix AN, purely due to Selwyn 'Borghetti' Cushing's ego.

It was at this point when the start of the end for Ansett began, with then-CEO Eddington resigning from Ansett shortly after to head BA, and "Borghetti-Cushing" putting in his hapless sidekick Gary Toomey as CEO of the combined identity.

https://australianaviation.com.au/2019/09/from-the-archives-the-ansett-collapse/

[markontop]

Yes QF was Government owned. Like CBA, TELSTRA etc.
The Labor Government forgave QF debt before it was privatised. I believe you could call this assistance.
A new airline if you like with no debt. Good deal wouldn’t you agree?

[Kiwiconehead]

NZ used their veto (acquired from when they purchased the first 50% from TNT) so they can fully own Ansett, despite fully knowing they had a "crap" balance sheet to fix AN, purely due to Selwyn 'Borghetti' Cushing's ego.

Selwyn Cushing was Brierley Investment's man in Air NZ - the acquisition of the second half of Ansett was a gambit to offload Brierley's Air NZ shareholding to SIA

This article is worth a read

The Air New Zealand crash - sharechat.co.nz (http://www.sharechat.co.nz/article/8e223e46/the-air-new-zealand-crash.html)

[markontop]

DANV compare and contrast your article with this;COVER STORY: Canberra to blame for Ansett's demiseby Peter Westmore

News Weekly, September 22, 2001


The sudden collapse of Ansett Airlines has been followed by the inevitable recriminations against Air New Zealand, Singapore Airlines, the NZ Government, and anyone else who had a hand in the company's fall.

The real blame lies closer to home: with successive Australian governments which have approved foreign takeovers of companies like Ansett; and which - in pursuit of competition policy - permitted new low-cost airlines to "pick the eyes" out of the most profitable capital city routes, leaving older airlines to provide services on uneconomic routes, particularly in rural and regional areas.

The Ansett fiasco highlights the danger of allowing foreign ownership of key national assets - a consequence of the virtual abandonment of controls on foreign ownership, first by the Hawke and Keating Labor Governments, and now by the Coalition.

An inevitable consequences of the globalised economy - so loudly trumpeted by the Federal Treasurer, Peter Costello, and his Labor counterpart, Simon Crean - is that decisions affecting Australia, its industries, economy and employment, are increasingly being made in the boardrooms of foreign corporations - in Tokyo, New York, London and Auckland.

The decision of Air New Zealand to walk away from Ansett could never have happened if Ansett had remained an Australian company.

A very similar scenario could well have arisen recently with Mitsubishi Motors, whose Adelaide operations were only kept open after John Howard went cap-in-hand to the Japanese parent company in Tokyo, to prevent the plants' closure.

For Ansett, an airline which has existed since 1936, when Reg Ansett flew a single-engined, six-seater Fokker Universal from Hamilton to Melbourne, the collapse has been both sudden and traumatic.

With some 16,000 employees around Australia and overseas, Ansett carries around 40 per cent of Australia's air travellers, and provides vital services to many rural and regional areas.

The collapse of the company has undoubtedly been influenced by bad management decisions years ago in relation to Ansett's fleet of aircraft, and the changes of ownership which arose in the 1980s, when Ansett fell under the control of News Limited and TNT.

But what is obvious in hindsight was not apparent at the time.

In fact, Ansett won the coveted National Travel Industry Award for Best Airline every year from 1994 to 1997, when it had already established a close partnership with Air New Zealand, providing it with access to the much larger Australian business and tourist markets.

Air New Zealand, a government airline privatised in 1989, gained the Howard Government's approval to buy a 50 per cent share in Ansett in 1997. In June last year, Australia's Foreign Investment Review Board approved Air New Zealand's full takeover of Ansett.

Ansett was adversely affected by the Asian economic downturn in 1997, suspending services to Seoul, Kuala Lumpur and Jakarta.

More recently, it haemorrhaged due to the introduction of two low-cost "no frills" airlines, Impulse and Virgin Blue, on the highly profitable capital city routes around Australia.

Impulse, launched in April 2000, did not survive, and was sold to Qantas in May this year.

(Qantas was not immune to these problems. Its Australian operations have been adversely affected by the low-cost competition, and the company which operated Qantas' New Zealand franchise went into receivership in April.)

Ansett's troubles attracted major attention earlier this year when its fleet of ageing Boeing 737s was grounded, pending checks on the company's maintenance records. This forced Ansett to announce plans for a complete refurbishment of its fleet.

The immediate cause of Ansett's collapse was the decision of the New Zealand Government not to permit Singapore Airlines, which owns 25 per cent of Air New Zealand, to inject cash into Air New Zealand (and Ansett) by increasing its shareholding up to 49 per cent, despite the unanimous endorsement of the plan by the Air New Zealand board last month.

Singapore Airlines, fully owned by the Singapore Government, and with a net profit for the year to March 31 of more than $1.5 billion, may well be the ultimate beneficiary of Ansett's demise.

A Government whose Acting Prime Minister, John Anderson, has ruled out any direct intervention to avert the Ansett collapse is unlikely to think in terms of ways of averting similar disasters in future.

If Australia is to have economic sovereignty, it must act to rebuild Australian ownership of strategic companies like Ansett.

A way forward would be for the Australian Government to follow Singapore's example, and set up a fund which can buy into key national enterprises, such as Ansett and Qantas.

The capital base for such a fund could come from the compulsory superannuation contributions currently paid by Australia's nine million employees, billions of which currently end up off-shore, in foreign investments.



Peter Westmore is President of the National Civic Council

[DanV2]

The posted link in Post #7, just confirms a lot of people's suspicions.

It was "Borghetti-Cushing's" decision to veto SIA from buying 50% of Ansett the first time around that began the end of Ansett.

The following article in post #8 I believe is where the 'unconfirmed' rumours whether Canberra and/or QF had involvement in lobbying the NZ government to not lift the foreign ownership cap in Air NZ to 49% came from.

[John Citizen]

Yes QF was Government owned. Like CBA, TELSTRA etc.
The Labor Government forgave QF debt before it was privatised. I believe you could call this assistance.
A new airline if you like with no debt. Good deal wouldn’t you agree?

and this happened only a few months later:

the Qantas float proceeded in 1995. The public share offer took place in June and July of that year, with the government receiving A$1.45 billion in proceeds

Yes a very good deal. The government assisted with $1.35 billion and got back $1.45 million less than 6 months later. I don't think VAH could do the same.

[ShandywithSugar]

and this happened only a few months later:




Yes a very good deal. The government assisted with $1.35 billion and got back $1.45 million less than 6 months later. I don't think VAH could do the same.


John please , that doesn't fit the message or the hashtags. Don't start getting factual. ####

[MickG0105]

Yes QF was Government owned. Like CBA, TELSTRA etc.
The Labor Government forgave QF debt before it was privatised. I believe you could call this assistance.
A new airline if you like with no debt. Good deal wouldn’t you agree?
The government didn't forgive the debt before Qantas was privatised at all, they converted government guaranteed debt to equity. In that regard it was a balance sheet shuffle that enabled the government to reduce borrowings (the transaction was recorded as negative new money borrowing) by moving debt underwritten for Qantas to an equity position that they then banked when the sale finalised.

And it most assuredly was not a new airline with no debt. The airline carried a total of about $1.3 billion in debt at the time of the sale. That debt had to be refinanced prior to the sale to address change of ownership covenants on much of it. That refinancing required that Qantas have an international credit rating - prior to the sale it had simply relied on government guarantees.

That was another reason for the way the sale was managed in two tranches with a delay between the initial trade sale and the subsequent public float.

The notion being peddled by one of the finance writers at one of the national newspapers that Qantas was given a leg up of some description during the sale process - 'a $1.35bn cash injection from Canberra' - is just risible nonsense.

[markontop]

Fair enough.
However as you are so knowledgeable what was their total asset position?
Also I’m sure they acquired Australian airlines on favourable terms, know anything about that?
As for privatisation I’m sure they fattened the cow before the float. Imagine if the mum and dad shareholders lost money.

[MickG0105]

Fair enough.
However as you are so knowledgeable what was their total asset position?
Also I’m sure they acquired Australian airlines on favourable terms, know anything about that?
As for privatisation I’m sure they fattened the cow before the float. Imagine if the mum and dad shareholders lost money.
I've been trying to locate a copy of the Qantas public share offer prospectus but I haven't been able to find an online version, so no, I can't comment on the asset position.

As to Australia Airlines, they were acquired by Qantas for $400 million back in September 1992.

[Going Boeing]

As to Australia Airlines, they were acquired by Qantas for $400 million back in September 1992.

Yes, that is what Qantas had to pay & it was quite a premium. SQ had done due diligence on buying TN and they found that, following the '89 domestic Pilot's Dispute, TN was in a poor financial position so they offered $115M for it. The Federal Government (Labor) wanted $400M for their coffers and Qantas was the only company prepared to pay such a premium because they wanted to have the rights to fly domestically (prohibited under the two airline AN & TN agreement). Qantas, of course was still government owned at the time so it was one government company paying a premium for another.

markontop, your recollection of the events surrounding AN seems to be different to mine, & many others.

[markontop]

Which bit?

[Section28- BE]

Oh Dear-

And here 'we' are/arrive, Now- in 'the' Hair-Splitting vector- of History.

'DanV2'- per-chance???, 'may' 'Lookleft'- have, been referring too the Time 'Preceding', your Accurate Account of history at Ground Zero/Melt-Down (with reference, the AA article/historical piece, quoted), and therefore 'the ultimate Execution- of the ANZ's preemptive Clause/Right.............

'It', 'the 'Gig'/AN- preceded/went way longer/prior/back, with regard- too, the time of which 'you' speak/quote.

e.g. Mr Dixon/& Toomey/ and others were fighting for the QF job (Borgetti-Borgetti-Boggetti/ Bueller- Bueller- Bueller....???, anyone!!!!), back then/when Mr Strong was 'moving-on'.............

And YES- 'That' is WHAT Ultimately happened/transpired!!!!, execution of the preemptive right/clause- GOTYA.

Not- the most 'Humane/Viable' option, indeed the 'Last' option floated/pushed from 'that' time - but, 'funny' stuff happens in 'times' like these...........

Mr Lookleft- is Not 'Known' to me- but 'reckon', with what has been posted here since, there are enough folk here- to lay 'It' out...............

Rgds- Stay Safe & Well,
Look out for Each-Other/& All.
S28- BE

[markontop]

Section 28 you’re totally right.
Over this 20 years ago, same protagonists, same motives and as we will see, same outcomes.
.....

[John Citizen]

Qantas had an equity of $2 billion in 1993, unlike VAH which only has $619 million (FY19).

Qantas 1993 report (https://nla.gov.au/nla.obj-1186377639/view?sectionId=nla.obj-1300745218&partId=nla.obj-1188063575#page/n6/mode/1up)

[MickG0105]

Qantas had an equity of $2 billion in 1993, unlike VAH which only has $619 million (FY19).

As at 31 December last year, VAH was in negative equity territory to the tune of $1.6 billion. How any exec team or board could in good conscious countenance adding $2.2 billion in debt and liabilities in just six months to take the net worth of the company underwater to that extent is anyone's guess.

[Going Boeing]

Which bit?
SQ being blocked in its bid to buy half of Ansett.

Ansett was 50% owned by Rupert Murdock's News Corp and 50% by Peter Abeles' TNT Corp. When times starting getting tough & no pot of gold could be made in aviation, Abeles succesfully negotiated to sell his 50% to Air NZ. News Corp also decided that it wanted out so it appointed Rod Eddington as the AN CEO with his main responsibility to prepare the airline for the sale of News Corps' share. Air NZ appeared to take on the role of silent partner and didn't see a conflict of interest with 100% of Eddington's salary being paid by News Corp. Eddington siphoned as much money as possible into News Corps coffers whilst negotiating a potential sale of the AN carcass to SQ. When agreement was reached between News Corp and SQ (AU$500M), Air NZ became aware and decided to exercise their first preference right to purchase the other 50% of AN. This obviously infuriated SQ & dissapointed News Corp but they didn't complain much, just took the money and exited.

Now Air NZ started to integrate networks and became aware just how dire the AN finances were (I remember being told by a very senior AN training captain in 1999 that AN had $40M in reserve and they were bleeding $1M every week). In 2000, Toomey lost out to Dixon for the gig to replace Strong as QF's CEO and, some time later, he was chosen to be the Air NZ/AN CEO. Toomey was aware of the AN financial situation, as QF had people monitoring the finances of their competitors, so one of his early actions was to find out the true situation. The senior staff admitted that they really didn't know how bad it was so Toomey set up a team to do a thorough investigation and report back with the truth no matter how bad the situation was. The results were as bad as feared and meant that the parent company, Air NZ, was also at serious risk. It was at this point that Air NZ began to take all remaining AN assets of value (not a lot left due to News Corps plundering) and then Toomey offered to sell AN to QF for $1. It was an easy decision for Dixon to decline as it would have meant taking on the massive debt that AN had accrued. After that, it was only a matter of time before AN was cast adrift by Air NZ and the fallout of 9/11 precipitated the closure. Air NZ was so badly burnt by this that they would also have failed if not for being bailed out by the Kiwi Government.

Borghetti wasn't a player in any of this as he wasn't high enough up the QF corporate ladder at the time. He became prominent in the mid 2000's (replaced Lyle Strambi in charge of International operations). He was a candidate to replace Dixon as QF CEO along with Peter Gregg (CFO) and the eventual winner Alan Joyce (JQ CEO). As he couldn't work with Joyce, he departed and some time later, Branson convinved the Virgin Blue board to select Borghetti as their new CEO, replacing Brett Godfrey.

[B772]

markontop. Re your post #8. The aircraft type was B767 not B737.

Your quoted article went on to state "If Australia is to have economic sovereignty, it must act to rebuild Australian ownership of strategic companies like Ansett.
A way forward would be for the Australian Government to follow Singapore's example, and set up a fund which can buy into key national enterprises, such as Ansett and Qantas.The capital base for such a fund could come from the compulsory superannuation contributions currently paid by Australia's nine million employees, billions of which currently end up off-shore, in foreign investments"

We now have that fund. It was formed in 2006 and named the Future Fund. It has a current value of $168B. Unfortunately or fortunately the Chair and Guardians of the Future Fund will not invest 1 cent in VA. The Prime Minister has suggested Union Aligned Superannuation Funds with $3T of assets especially the TWU Super Fund should step in and save VA. The response from the Union Aligned Superannuation Funds being "pretty nuts and we do not invest in junk bonds".

The Super early release scheme starts on Monday 20 April. This is expected to put pressure on the union not for profit funds which could create liquidity issues for some funds. The 30 June 20 returns for these funds are going to be a negative 20 to 30% due to the revaluation of their assets to support the huge redemptions.

The downturn on the economy has some way to go yet even if borders and all restrictions were lifted tomorrow.

[601]

The response from the Union Aligned Superannuation Funds being "pretty nuts and we do not invest in junk bonds".

But they are not backwards in coming forward in asking all of us to invest in the same "junk bonds"