Airline puts rescue plan to creditors QO Owes over $11M
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Airline puts rescue plan to creditors QO Owes over $11M
30 April 2004
By ROELAND VAN DEN BERGH, The Dominion Post
New Zealand's second-biggest airline, Origin Pacific, has put a rescue plan to its major creditors in an effort to stave off bankruptcy.
The Nelson-based regional carrier owes about $11.8 million to unsecured creditors, including $1.85 million to State-owned Airways Corporation.
The plan, obtained by The Dominion Post, offers to pay about 275 creditors who are owed less than $10,000 in full, but another 70 who are owed more will get just 40 cents in the dollar in the next five years.
Origin's founders and main shareholders, Robert Inglis and his partner, Nicki Smith, will also pump in $2.5 million of their own money to help pay the bills.
All tickets will be honoured and passenger funds are held in a trust account, the document says.
Creditors will vote on the deal on May 7.
Origin has fallen on hard times after intense competition from Air New Zealand and because Qantas abruptly pulled out of a passenger-sharing agreement in December.
Qantas' decision, effective from April 1, slashed Origin's income by up to 40 per cent and has left it with a fleet and network schedule too big for the number of passengers carried.
The first signs of trouble came last week when 450 full and part-time staff were told some would be made redundant as the airline retrenched to focus on its regional routes, its growing freight business and charter work.
At least one of its 64-seat ATR 72 aircraft is to be withdrawn and some other aircraft are to fly on fewer scheduled passenger services.
The exact number of jobs to go is still to be determined.
Mr Inglis said last week he was confident the airline would survive, but in a proposal document mailed to the main creditors on Wednesday the directors spell out that the airline will fail if the rescue package is not approved.
"Origin is in financial difficulties," the directors say. "If the proposal is not successful the directors will have little alternative but to liquidate the company or invite the appointment of receivers."
Origin blames the Government bailout of Air New Zealand in 2001 for setting "in place a chain of events that have collectively contributed to the company's current financial difficulties".
Since the $885 million taxpayer funded rescue of the national carrier, Air New Zealand has introduced a low-cost model, slashing fares and increasing capacity. Air New Zealand is one of Origin's main creditors, owed $338,000 for engineering services.
Australian airline Qantas also scaled back its use of Origin Pacific flights after its announcement that it was pursuing an alliance with Air New Zealand.
General manager of sales and marketing Ewan Wilson announced on Wednesday he would leave the company on May 1, a month earlier than allowed for in his fixed-term contract, to focus on his bid for the mayoralty of Hamilton.
Good luck to them, hopefully everything will clear up. New Zealand can't afford to have a single airline serving the provinces at a monopoly...
By ROELAND VAN DEN BERGH, The Dominion Post
New Zealand's second-biggest airline, Origin Pacific, has put a rescue plan to its major creditors in an effort to stave off bankruptcy.
The Nelson-based regional carrier owes about $11.8 million to unsecured creditors, including $1.85 million to State-owned Airways Corporation.
The plan, obtained by The Dominion Post, offers to pay about 275 creditors who are owed less than $10,000 in full, but another 70 who are owed more will get just 40 cents in the dollar in the next five years.
Origin's founders and main shareholders, Robert Inglis and his partner, Nicki Smith, will also pump in $2.5 million of their own money to help pay the bills.
All tickets will be honoured and passenger funds are held in a trust account, the document says.
Creditors will vote on the deal on May 7.
Origin has fallen on hard times after intense competition from Air New Zealand and because Qantas abruptly pulled out of a passenger-sharing agreement in December.
Qantas' decision, effective from April 1, slashed Origin's income by up to 40 per cent and has left it with a fleet and network schedule too big for the number of passengers carried.
The first signs of trouble came last week when 450 full and part-time staff were told some would be made redundant as the airline retrenched to focus on its regional routes, its growing freight business and charter work.
At least one of its 64-seat ATR 72 aircraft is to be withdrawn and some other aircraft are to fly on fewer scheduled passenger services.
The exact number of jobs to go is still to be determined.
Mr Inglis said last week he was confident the airline would survive, but in a proposal document mailed to the main creditors on Wednesday the directors spell out that the airline will fail if the rescue package is not approved.
"Origin is in financial difficulties," the directors say. "If the proposal is not successful the directors will have little alternative but to liquidate the company or invite the appointment of receivers."
Origin blames the Government bailout of Air New Zealand in 2001 for setting "in place a chain of events that have collectively contributed to the company's current financial difficulties".
Since the $885 million taxpayer funded rescue of the national carrier, Air New Zealand has introduced a low-cost model, slashing fares and increasing capacity. Air New Zealand is one of Origin's main creditors, owed $338,000 for engineering services.
Australian airline Qantas also scaled back its use of Origin Pacific flights after its announcement that it was pursuing an alliance with Air New Zealand.
General manager of sales and marketing Ewan Wilson announced on Wednesday he would leave the company on May 1, a month earlier than allowed for in his fixed-term contract, to focus on his bid for the mayoralty of Hamilton.
Good luck to them, hopefully everything will clear up. New Zealand can't afford to have a single airline serving the provinces at a monopoly...
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I just don't understand how a supposedly business savvy Inglis could be so slow to react to the QF pullout. What about getting into bed with the likes of EK or Pacific Blue? I'm not really up with the play with the whole thing but it just seems to be such a shame for a great little airline.
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Staff were told before Christmas that Origin weren't dependant on Qantas. Ranks along with the advice RI gave pilots when he was running Air Nelson ("stick with me - you'll go places")
Other points to consider:
If RI/NS are putting 2.5mill of their own money in, it is some of the profit they made when they sold Air Nelson. The pilots at Air Nelson certainly didn't see any of it.
Nelson offers a great lifestyle. Origin could have secured a motivated, experienced workforce who would be keen to stay, with little effort or additional costs:
- a management structure that facilitated communication
- decent staff travel (remember it is always on a standby basis so no loss if revenue)
- a sorted career progression - seniority or something similar so pilots would be encouraged to stay
- some sort of pay rise tied in to performance of the company (instead of no pay rise at all for the last five odd years).
Instead staff are taken for granted, resulting in a huge turnover with associated high training costs and disgruntled staff offering minimal customer service and only waiting for the next opportunity.
He may be savvy(?) but he has had some great breaks - both at Air Nelson and Origin. Just one example - Qantas NZ falling over leaving planes, pilots and routes ripe for picking. He could learn a lot from Air Nelson - a fairly good contract for staff, and the planes chocka - forget Air NZ being bailed out - Air Nelson makes a huge profit on it's own.
Other points to consider:
If RI/NS are putting 2.5mill of their own money in, it is some of the profit they made when they sold Air Nelson. The pilots at Air Nelson certainly didn't see any of it.
Nelson offers a great lifestyle. Origin could have secured a motivated, experienced workforce who would be keen to stay, with little effort or additional costs:
- a management structure that facilitated communication
- decent staff travel (remember it is always on a standby basis so no loss if revenue)
- a sorted career progression - seniority or something similar so pilots would be encouraged to stay
- some sort of pay rise tied in to performance of the company (instead of no pay rise at all for the last five odd years).
Instead staff are taken for granted, resulting in a huge turnover with associated high training costs and disgruntled staff offering minimal customer service and only waiting for the next opportunity.
He may be savvy(?) but he has had some great breaks - both at Air Nelson and Origin. Just one example - Qantas NZ falling over leaving planes, pilots and routes ripe for picking. He could learn a lot from Air Nelson - a fairly good contract for staff, and the planes chocka - forget Air NZ being bailed out - Air Nelson makes a huge profit on it's own.
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I hate to be a told ya so, but......
You just have to see how many managers have moved through the place.
Capt C, you couldn't be more correct.
Actually Luck has a large part to play as well as having some switched -on crew to work with in those days.
You just have to see how many managers have moved through the place.
Capt C, you couldn't be more correct.
Actually Luck has a large part to play as well as having some switched -on crew to work with in those days.
Last edited by BCF Breath; 30th Apr 2004 at 05:51.
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Gossip has it that Air Nsn will be looking for a few (12+) temp pilots prior to/and when (if) the new type arrives.
So pop over and drop off ya CV's.
Oh, and fire one off to Air NZ as well.
So pop over and drop off ya CV's.
Oh, and fire one off to Air NZ as well.
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Yeah, I agree. Although a job is a job, the temps got shafted, REALLY SHAFTED! 
The ones they hired back have had to start off at the bottom again. NO benefit for time served for salary or staff travel. What a rip-off. Shame on the Company for that.
The Temp thing really backfired on Air NSN too.
Most of the temps found jobs elsewhere and left Nsn with a major crew shortage that is only just being addressd/fixed after 24+ months.
The ones they hired back have had to start off at the bottom again. NO benefit for time served for salary or staff travel. What a rip-off. Shame on the Company for that.
The Temp thing really backfired on Air NSN too.
Most of the temps found jobs elsewhere and left Nsn with a major crew shortage that is only just being addressd/fixed after 24+ months.
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Sounds like the creditors are behind the company but most of the debt is offshore (Bae). Im pretty optimistic that origin will be o.k but its just got to sort out its debt and operate within its means for the next while.
Its all very well to compare QO with other operators (air nsn)but there are somethings you need to remember.
*It is a small stand alone company without a parent company behind it( air nsn has airnz) to help it out if it does go pear shaped.
*limited private funds are open to it, which also limits how compeditive you can be in the market and what you can offer your staff in order of pay, conditions and staff travel (which with the exception of international travel is on par with air nsn.)
Whatever opinion you have of robert i think he commands some respect for what he has achived, alot of you guys wouldnt be where you are today without the oppertunities he has offered.
Personal opinion is that QO will come through it (eventually) it what form we'll have to wait and see.
Its all very well to compare QO with other operators (air nsn)but there are somethings you need to remember.
*It is a small stand alone company without a parent company behind it( air nsn has airnz) to help it out if it does go pear shaped.
*limited private funds are open to it, which also limits how compeditive you can be in the market and what you can offer your staff in order of pay, conditions and staff travel (which with the exception of international travel is on par with air nsn.)
Whatever opinion you have of robert i think he commands some respect for what he has achived, alot of you guys wouldnt be where you are today without the oppertunities he has offered.
Personal opinion is that QO will come through it (eventually) it what form we'll have to wait and see.
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Nice to see someone being positive for a change, despite the uncertainty.
The game is still evolving. The numbers and details are changing every day (literally). Even if Origin survives next Friday (when the ballots are returned), the future is far from secure.
No one wants to be the only one left without a chair when the music stops.
We need to make sure we've got a chair reserved, even if it is a temp Air Nelson chair. We can't be fussy, we need to do whatever we can do to keep flying in the meantime and figure out the finer points later.
Good luck to all.
Bombay.
The game is still evolving. The numbers and details are changing every day (literally). Even if Origin survives next Friday (when the ballots are returned), the future is far from secure.
No one wants to be the only one left without a chair when the music stops.
We need to make sure we've got a chair reserved, even if it is a temp Air Nelson chair. We can't be fussy, we need to do whatever we can do to keep flying in the meantime and figure out the finer points later.
Good luck to all.
Bombay.
