My Latest Employee Update From M&M
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My Latest Employee Update From M&M
Here's the latest update from the two M's.
I feel so much better for reading......NOT
Regards
Lozza
An update for former employees
Update 14 4 August, 2003
Dear former employee,
The following Employee Update covers the recent sale of Ansett Aircraft Spares and Services (“AASS”), the spare parts marketing company operating in the USA and UK and the impact this has on the spare parts owned by Ansett. There is also a detailed update on the aircraft marketing status. The Employee Update also provides an outline of various legal claims by employees.
ANSETT AIRCRAFT SPARES AND SERVICES: We are pleased to advise the successful sale of AASS.
The AASS business operates internationally from facilities in the US and UK and was 100% owned by Ansett. In the US, the business was placed into Chapter 11 bankruptcy proceedings on 24 September 2001. We worked extensively with management, particularly during the period June 2002 to December 2002, to restructure the business and as a result, the company was taken out of bankruptcy on 31 January 2003.
Since the exit from bankruptcy, we continued discussions on a management buyout (MBO) and attempted to strengthen the MBO with a joint venture between CASCO, a spare parts company in the United Kingdom. After significant effort, the MBO and joint venture was unable to be concluded by April/May 2003.
Because of significant competitive threats and other matters, we decided to proceed with a revised MBO and set a deadline for completion of 30 June 2003, which was achieved.
We received funds on completion of the sale and will receive further instalments over the next three years. The deal is not without risk in collecting our monies, however what we have collected to date is substantially better than both our estimate in the Third Report to Creditors and the real possibility of AASS’s liquidation.
Overall we believe this is a reasonable deal in the circumstances, which exceeds our expectations from the last report and easily surpasses the tenders we received for the bulk sale of spare parts some 12 months ago of approximately $12 million.
SALE OF SPARE PARTS: In our Third Report to Creditors, we estimated to receive $A43 million from the sale of spare parts over the next three years. To date we have received $A14 million, leaving a balance of $A31 million.
We have entered into a consignment and marketing agreement with AASS for the exclusive sales of rotables and consumables. The contract does not include engines, aircraft etc. The contract has minimum performance standards and AASS have committed to the sale of US$47 million of spare parts over the next three years. After commission, overhaul costs which are substantial, cost of freight etc, we expect this agreement to at a minimum deliver us $A31 million.
The sale of AASS, together with entering the market in consignment agreement, means that the administration is significantly simplified in that we now no longer have responsibility for the 60 AASS employees and the risk of their operations. We now only manage ownership of the spare parts and the marketing agreement.
FLEET REMARKETING ACTIVITIES:
In summary, we have the following aircraft for sale.
2 A320, fully serviced
7 767 200 with various maintenance check requirements - 1 being parted.
4 Fokker 50 on lease in Sweden
4 SAAB 340A on lease to REX and likely to be returned.
3 BA146 200 – 2 with wing corrosion
10 BA146 300 available for sale
2 BA146 200QT available for sale
32 Total aircraft owned
Following an evaluation process carried out since late last year, we appointed Pembroke Capital Limited as the exclusive remarketing agents for the two remaining Ansett owned Airbus A320 aircraft. Cabot Aviation Limited were appointed as the exclusive remarketing agents for six owned Boeing 767-200 aircraft. The remarketing agents were selected on the basis of their established presence in key markets for aircraft enquiries and financiers (Europe and USA) and their reputation and experience in placing aircraft of these type and age.
Both remarketing agents have been instructed to focus on the out-right sale of the aircraft, or alternatively a lease that would reasonably be expected to lead to the ultimate sale of the aircraft. Options that would generate short-term cash funds, including “power-by-the-hour” arrangements are also being considered, where the credit and operator risks are deemed acceptable. We receive regular updates from both remarketing agents, including commentary on recent market transactions for the respective fleet types and details of current placement options.
Overall market conditions continue to be poor, particularly for aircraft of this age and also due to many factors which have been well publicised recently (SARS etc). Certain key messages from the remarketers are as follows:
• Recently both Boeing and Airbus have estimated that of the 2,100+ commercial aircraft currently in storage, only 500-600 are expected to return to service. If the Ansett aircraft are moved to the desert, this would significantly hamper the remarketing efforts and would be considered likely that they would not return to service, therefore their ultimate realisation value would be lower than current estimates.
• There are in excess of 27 Boeing 767-200 aircraft currently advertised as available (including 6 Ansett aircraft), with a further 8 known to be parked but not yet actively remarketed. Of this fleet type, there has only been one known sale in the past 20 months. Notwithstanding this, many owners have maintained their asking prices at a high level due to their high remaining book values and their estimates of the long-term value in these aircraft.
• We are currently pursuing numerous active lines of enquiry for one or more of the B767 aircraft, involving parties in Europe, USA, Russia, South America and Africa. At this stage it is not possible to estimate the chances of these prospects concluding successfully, however all prospects are being fully explored.
• While Eastern Europe and Russia are considered prime markets for aircraft of this type and age, the import duties and VAT payable on importation of foreign aircraft make many possible deals too expensive for local operators. We are considering alternative structures to access these markets.
• There are currently in excess of 45 A320 aircraft listed as stored, with up to 40 more close to lease expiry or early termination and are being remarketed by their owners. Pembroke are actively offering the two Ansett aircraft fresh from heavy maintenance check and have identified current prospects in Europe, Africa and the Middle East.
ANSETT FLEET TRADING:
The Ansett Fleet Trading team (“AFT”) continues to work closely with the remarketing agents to assist them in their efforts and AAES provides valuable on-going technical support. AFT also continues to re-market all British Aerospace BAe146 aircraft, the four Fokker 50 aircraft (currently on lease in Sweden) and the remaining Saab 340A aircraft owned by Kendell (currently on lease with Regional Express).
In early June, the AFT manager and a Korda Mentha representative conducted a marketing trip to Europe to visit many current and potential operators of BAe146 aircraft in the UK, Italy and other European locations. The meetings proved very fruitful and reaffirmed that a market for these aircraft (of which production ceased in 1994/95) continues to exist, albeit it is also impacted due to the current state of the global aviation industry, together with certain issues specific to this type (including wing corrosion issues). Following these meetings, AFT are following up several identified opportunities for the sale and/or lease of a number of aircraft and firm offers are being solicited by the operators.
We look forward to providing some positive updates regarding these aircraft at a later date.
EMPLOYEE CLAIMS:
Numerous legal claims are being made by Ansett ex employees. These claims are described below. The effect of these claims, if successful, are as follows:
• Certain claims will reduce the amount of cash available to all employees.
• Certain claims will increase the total employee entitlements of $735.8m (as estimated in our Third Report to Creditors) and accordingly, some employees will benefit and others will be worse off.
• The pool of funds is being reduced by legal costs and the Deed Administrators’ time dealing with these issues.
The legal claims by employees that are being handled by the Deed Administrators’ team and their lawyers include:
Superannuation: As you are aware, the major legal case is the appeal by the Trustees of the Ground Staff Superannuation Plan as to, amongst other issues, whether a retrenchment benefit is a priority entitlement. The appeal is to commence on 11 August 2003. The claim is for up to $200m.
A320 Pilots Training Claim – a number of pilots were offered an opportunity to undertake training during the administration period after being offered a position by Tesna. These pilots have not been paid for this training and are claiming it as being owed by Ansett. This claim is being defended on the basis that Tesna is responsible for the payment of these wages. Tesna has been repeatedly requested to make this payment.
ALAEA Claim in relation to notice and redundancy – the ALAEA, on behalf of its members, has claimed that redundancy entitlements should be calculated differently than the way it has been assessed by the Deed Administrators. In particular, the ALAEA has claimed that payment in lieu of notice can be calculated pursuant to an industrial agreement that is different to the industrial agreement from which redundancy is calculated, allowing a greater claim. Further, the ALAEA have also claimed there should be no cap on redundancy. These claims have been successful at first instance in the Court and are being appealed by Ansett.
APA Redundancy Claim – the APA, on behalf of its members, is claiming that redundancy should be calculated pursuant to the CR Policy, when it has been calculated pursuant to EBA IV. This matter will be vigorously defended.
Individual Ansett Pilots Redundancy Claim – a group of five Ansett pilots have claimed they are entitled to be paid redundancy, when it is the position of the Deed Administrators that these pilots resigned and so are not entitled to redundancy.
Australian Concessions Management Claim – there are various claims by employees of Australian Concessions Management. These include incorrect entitlement calculations, recognition of prior service and whether these employees were subject to the stand-down orders.
Various Individual Kendell Employee Claims – there are a number of claims by Kendell employees, including requests for redundancy, when it is the position of the Deed Administrators that these employees resigned, relocation allowances, requirement to bring qualifications up to date on termination and requests for time in lieu owed. These claims are being dealt with individually, however a group of four Kendell management employees have recently commenced proceedings in the Federal Court.
Individual Claims through the Ansett Proof of Debt Process – a small number of individual claims have been brought to the attention of the Deed Administrators through the proof of debt process, which are being dealt with.
Mark Korda - Mark Mentha
Joint Deed Administrator
I feel so much better for reading......NOT
Regards
Lozza
An update for former employees
Update 14 4 August, 2003
Dear former employee,
The following Employee Update covers the recent sale of Ansett Aircraft Spares and Services (“AASS”), the spare parts marketing company operating in the USA and UK and the impact this has on the spare parts owned by Ansett. There is also a detailed update on the aircraft marketing status. The Employee Update also provides an outline of various legal claims by employees.
ANSETT AIRCRAFT SPARES AND SERVICES: We are pleased to advise the successful sale of AASS.
The AASS business operates internationally from facilities in the US and UK and was 100% owned by Ansett. In the US, the business was placed into Chapter 11 bankruptcy proceedings on 24 September 2001. We worked extensively with management, particularly during the period June 2002 to December 2002, to restructure the business and as a result, the company was taken out of bankruptcy on 31 January 2003.
Since the exit from bankruptcy, we continued discussions on a management buyout (MBO) and attempted to strengthen the MBO with a joint venture between CASCO, a spare parts company in the United Kingdom. After significant effort, the MBO and joint venture was unable to be concluded by April/May 2003.
Because of significant competitive threats and other matters, we decided to proceed with a revised MBO and set a deadline for completion of 30 June 2003, which was achieved.
We received funds on completion of the sale and will receive further instalments over the next three years. The deal is not without risk in collecting our monies, however what we have collected to date is substantially better than both our estimate in the Third Report to Creditors and the real possibility of AASS’s liquidation.
Overall we believe this is a reasonable deal in the circumstances, which exceeds our expectations from the last report and easily surpasses the tenders we received for the bulk sale of spare parts some 12 months ago of approximately $12 million.
SALE OF SPARE PARTS: In our Third Report to Creditors, we estimated to receive $A43 million from the sale of spare parts over the next three years. To date we have received $A14 million, leaving a balance of $A31 million.
We have entered into a consignment and marketing agreement with AASS for the exclusive sales of rotables and consumables. The contract does not include engines, aircraft etc. The contract has minimum performance standards and AASS have committed to the sale of US$47 million of spare parts over the next three years. After commission, overhaul costs which are substantial, cost of freight etc, we expect this agreement to at a minimum deliver us $A31 million.
The sale of AASS, together with entering the market in consignment agreement, means that the administration is significantly simplified in that we now no longer have responsibility for the 60 AASS employees and the risk of their operations. We now only manage ownership of the spare parts and the marketing agreement.
FLEET REMARKETING ACTIVITIES:
In summary, we have the following aircraft for sale.
2 A320, fully serviced
7 767 200 with various maintenance check requirements - 1 being parted.
4 Fokker 50 on lease in Sweden
4 SAAB 340A on lease to REX and likely to be returned.
3 BA146 200 – 2 with wing corrosion
10 BA146 300 available for sale
2 BA146 200QT available for sale
32 Total aircraft owned
Following an evaluation process carried out since late last year, we appointed Pembroke Capital Limited as the exclusive remarketing agents for the two remaining Ansett owned Airbus A320 aircraft. Cabot Aviation Limited were appointed as the exclusive remarketing agents for six owned Boeing 767-200 aircraft. The remarketing agents were selected on the basis of their established presence in key markets for aircraft enquiries and financiers (Europe and USA) and their reputation and experience in placing aircraft of these type and age.
Both remarketing agents have been instructed to focus on the out-right sale of the aircraft, or alternatively a lease that would reasonably be expected to lead to the ultimate sale of the aircraft. Options that would generate short-term cash funds, including “power-by-the-hour” arrangements are also being considered, where the credit and operator risks are deemed acceptable. We receive regular updates from both remarketing agents, including commentary on recent market transactions for the respective fleet types and details of current placement options.
Overall market conditions continue to be poor, particularly for aircraft of this age and also due to many factors which have been well publicised recently (SARS etc). Certain key messages from the remarketers are as follows:
• Recently both Boeing and Airbus have estimated that of the 2,100+ commercial aircraft currently in storage, only 500-600 are expected to return to service. If the Ansett aircraft are moved to the desert, this would significantly hamper the remarketing efforts and would be considered likely that they would not return to service, therefore their ultimate realisation value would be lower than current estimates.
• There are in excess of 27 Boeing 767-200 aircraft currently advertised as available (including 6 Ansett aircraft), with a further 8 known to be parked but not yet actively remarketed. Of this fleet type, there has only been one known sale in the past 20 months. Notwithstanding this, many owners have maintained their asking prices at a high level due to their high remaining book values and their estimates of the long-term value in these aircraft.
• We are currently pursuing numerous active lines of enquiry for one or more of the B767 aircraft, involving parties in Europe, USA, Russia, South America and Africa. At this stage it is not possible to estimate the chances of these prospects concluding successfully, however all prospects are being fully explored.
• While Eastern Europe and Russia are considered prime markets for aircraft of this type and age, the import duties and VAT payable on importation of foreign aircraft make many possible deals too expensive for local operators. We are considering alternative structures to access these markets.
• There are currently in excess of 45 A320 aircraft listed as stored, with up to 40 more close to lease expiry or early termination and are being remarketed by their owners. Pembroke are actively offering the two Ansett aircraft fresh from heavy maintenance check and have identified current prospects in Europe, Africa and the Middle East.
ANSETT FLEET TRADING:
The Ansett Fleet Trading team (“AFT”) continues to work closely with the remarketing agents to assist them in their efforts and AAES provides valuable on-going technical support. AFT also continues to re-market all British Aerospace BAe146 aircraft, the four Fokker 50 aircraft (currently on lease in Sweden) and the remaining Saab 340A aircraft owned by Kendell (currently on lease with Regional Express).
In early June, the AFT manager and a Korda Mentha representative conducted a marketing trip to Europe to visit many current and potential operators of BAe146 aircraft in the UK, Italy and other European locations. The meetings proved very fruitful and reaffirmed that a market for these aircraft (of which production ceased in 1994/95) continues to exist, albeit it is also impacted due to the current state of the global aviation industry, together with certain issues specific to this type (including wing corrosion issues). Following these meetings, AFT are following up several identified opportunities for the sale and/or lease of a number of aircraft and firm offers are being solicited by the operators.
We look forward to providing some positive updates regarding these aircraft at a later date.
EMPLOYEE CLAIMS:
Numerous legal claims are being made by Ansett ex employees. These claims are described below. The effect of these claims, if successful, are as follows:
• Certain claims will reduce the amount of cash available to all employees.
• Certain claims will increase the total employee entitlements of $735.8m (as estimated in our Third Report to Creditors) and accordingly, some employees will benefit and others will be worse off.
• The pool of funds is being reduced by legal costs and the Deed Administrators’ time dealing with these issues.
The legal claims by employees that are being handled by the Deed Administrators’ team and their lawyers include:
Superannuation: As you are aware, the major legal case is the appeal by the Trustees of the Ground Staff Superannuation Plan as to, amongst other issues, whether a retrenchment benefit is a priority entitlement. The appeal is to commence on 11 August 2003. The claim is for up to $200m.
A320 Pilots Training Claim – a number of pilots were offered an opportunity to undertake training during the administration period after being offered a position by Tesna. These pilots have not been paid for this training and are claiming it as being owed by Ansett. This claim is being defended on the basis that Tesna is responsible for the payment of these wages. Tesna has been repeatedly requested to make this payment.
ALAEA Claim in relation to notice and redundancy – the ALAEA, on behalf of its members, has claimed that redundancy entitlements should be calculated differently than the way it has been assessed by the Deed Administrators. In particular, the ALAEA has claimed that payment in lieu of notice can be calculated pursuant to an industrial agreement that is different to the industrial agreement from which redundancy is calculated, allowing a greater claim. Further, the ALAEA have also claimed there should be no cap on redundancy. These claims have been successful at first instance in the Court and are being appealed by Ansett.
APA Redundancy Claim – the APA, on behalf of its members, is claiming that redundancy should be calculated pursuant to the CR Policy, when it has been calculated pursuant to EBA IV. This matter will be vigorously defended.
Individual Ansett Pilots Redundancy Claim – a group of five Ansett pilots have claimed they are entitled to be paid redundancy, when it is the position of the Deed Administrators that these pilots resigned and so are not entitled to redundancy.
Australian Concessions Management Claim – there are various claims by employees of Australian Concessions Management. These include incorrect entitlement calculations, recognition of prior service and whether these employees were subject to the stand-down orders.
Various Individual Kendell Employee Claims – there are a number of claims by Kendell employees, including requests for redundancy, when it is the position of the Deed Administrators that these employees resigned, relocation allowances, requirement to bring qualifications up to date on termination and requests for time in lieu owed. These claims are being dealt with individually, however a group of four Kendell management employees have recently commenced proceedings in the Federal Court.
Individual Claims through the Ansett Proof of Debt Process – a small number of individual claims have been brought to the attention of the Deed Administrators through the proof of debt process, which are being dealt with.
Mark Korda - Mark Mentha
Joint Deed Administrator
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Quote "SALE OF SPARE PARTS: In our Third Report to Creditors, we estimated to receive $A43 million from the sale of spare parts over the next three years."
How long do they intend keeping the administration going ???
How long do they intend keeping the administration going ???
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There will only be another creditor's meeting if enough creditors request same.
Sirjfp, what is your angle? While there is money still coming in and the Administrators are not trading insolvent, I don't think another meeting would be allowed.
Sirjfp, what is your angle? While there is money still coming in and the Administrators are not trading insolvent, I don't think another meeting would be allowed.
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No angle cognac ,
I have moved on and have virtually written off any chance of getting anything from the administration. Now the lawyers are involved the situation will be dragged out as long as possible.
Bearing in mind that , if the ground staff super fund hadn't appealed the court decision it lost earlier in the year , we may have had 20 cents in the dollar now. Nothing the administrators can do about that but fight hard in the courts. I just didn't know if there was any more meetings scheduled or not.
I have moved on and have virtually written off any chance of getting anything from the administration. Now the lawyers are involved the situation will be dragged out as long as possible.
Bearing in mind that , if the ground staff super fund hadn't appealed the court decision it lost earlier in the year , we may have had 20 cents in the dollar now. Nothing the administrators can do about that but fight hard in the courts. I just didn't know if there was any more meetings scheduled or not.
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Yes! The wait for monies is frustrating but the trust deed decrees that the trustees have to exhaust every avenue through the courts because if they don't and one member mounts an appeal and wins the trustees and liable for all monies.
The administrators are not snowy white either. They have appealed the case won by the ALAEA.
The administrators are not snowy white either. They have appealed the case won by the ALAEA.
