Ansett Costs Air NZ An Extra $350M...
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Ansett Costs Air NZ An Extra $350M...
BUSINESS
WEDNESDAY, 31 OCTOBER 2001
B U S I N E S S S T O R Y
Ansett costs Air NZ an extra $350m
31 October 2001
By MATHEW LOH HO-SANG
Air New Zealand has confirmed the Ansett Australia ordeal has cost it an additional $350 million, losses which will be factored into the ailing airline's next financial result.
The losses, disclosed in the Air NZ annual report issued yesterday, follow the write-off of $1.321 billion over subsidiary Ansett, which was placed in voluntary administration on September 12.
Acting Air NZ chairman Jim Farmer QC today stressed the $350 million was never going to be written off and said the disclosure was simply being up-front about Ansett's losses after June 30 - the final date for the 2001 annual report.
"As the report states, with Ansett placed in voluntary administration, the effect was we (Air New Zealand) had to recognise additional losses of $350 million," Dr Farmer said.
"The first part of the loss was $185 million paid directly to Ansett's voluntary administrator. Another approximately $40 million has been paid to cover Ansett staff entitlements, while the remaining $125 million essentially covers the losses Ansett made while trading between the 1st of July and September 12."
Dr Farmer also made light of concerns aired by the airline's auditors, Deloitte Touche Tohmatsu. Deloitte gave the accounts the thumbs-up, but added in a note that there was "fundamental uncertainty" surrounding Air NZ due to uncertainties mainly surrounding the $885 million Government recapitalisation package which has yet to be completed.
"It is true to say the recapitalisation package is subject to the due diligence being completed by the Government and their advisers," Dr Farmer said.
"However, they have already handed over $300 million - no strings attached - and as they have good knowledge of the company, they have been looking since June, it would be a pretty extreme situation for them to pull out of the package.
"In fact, the chances of that (abandonment of the recapitalisation package) are so remote it's fanciful and in my opinion the auditors are just being typical cautious accountants."
The report also revealed that former Air NZ managing director Jim McCrea left the airline last year with almost $4 million. Mr McCrea's 44-year career at the airline ended abruptly on July 7 last year over a contract dispute.
He made $1.3 million in the year to June last year as managing director, and the $3.87 million he made in the year to this June includes a restraint-of-trade payment, superannuation and substantial accrued leave.
Mr McCrea spent nine years in the top job and, with former chairman Sir Selwyn Cushing, was an architect of the Ansett purchase. He has defended the Ansett deal, saying it would have worked had the airline responded better to a changing Australian market.
The annual report also shows that Sir Selwyn, who ran Air NZ as executive chairman till new chief executive Gary Toomey took over in January, was paid $270,000 for his troubles, on top of director fees of $154,000.
Australian director Sean Wareing, who retired last November, left with a golden handshake of $187,000 as well as $30,000 in director fees.
WEDNESDAY, 31 OCTOBER 2001
B U S I N E S S S T O R Y
Ansett costs Air NZ an extra $350m
31 October 2001
By MATHEW LOH HO-SANG
Air New Zealand has confirmed the Ansett Australia ordeal has cost it an additional $350 million, losses which will be factored into the ailing airline's next financial result.
The losses, disclosed in the Air NZ annual report issued yesterday, follow the write-off of $1.321 billion over subsidiary Ansett, which was placed in voluntary administration on September 12.
Acting Air NZ chairman Jim Farmer QC today stressed the $350 million was never going to be written off and said the disclosure was simply being up-front about Ansett's losses after June 30 - the final date for the 2001 annual report.
"As the report states, with Ansett placed in voluntary administration, the effect was we (Air New Zealand) had to recognise additional losses of $350 million," Dr Farmer said.
"The first part of the loss was $185 million paid directly to Ansett's voluntary administrator. Another approximately $40 million has been paid to cover Ansett staff entitlements, while the remaining $125 million essentially covers the losses Ansett made while trading between the 1st of July and September 12."
Dr Farmer also made light of concerns aired by the airline's auditors, Deloitte Touche Tohmatsu. Deloitte gave the accounts the thumbs-up, but added in a note that there was "fundamental uncertainty" surrounding Air NZ due to uncertainties mainly surrounding the $885 million Government recapitalisation package which has yet to be completed.
"It is true to say the recapitalisation package is subject to the due diligence being completed by the Government and their advisers," Dr Farmer said.
"However, they have already handed over $300 million - no strings attached - and as they have good knowledge of the company, they have been looking since June, it would be a pretty extreme situation for them to pull out of the package.
"In fact, the chances of that (abandonment of the recapitalisation package) are so remote it's fanciful and in my opinion the auditors are just being typical cautious accountants."
The report also revealed that former Air NZ managing director Jim McCrea left the airline last year with almost $4 million. Mr McCrea's 44-year career at the airline ended abruptly on July 7 last year over a contract dispute.
He made $1.3 million in the year to June last year as managing director, and the $3.87 million he made in the year to this June includes a restraint-of-trade payment, superannuation and substantial accrued leave.
Mr McCrea spent nine years in the top job and, with former chairman Sir Selwyn Cushing, was an architect of the Ansett purchase. He has defended the Ansett deal, saying it would have worked had the airline responded better to a changing Australian market.
The annual report also shows that Sir Selwyn, who ran Air NZ as executive chairman till new chief executive Gary Toomey took over in January, was paid $270,000 for his troubles, on top of director fees of $154,000.
Australian director Sean Wareing, who retired last November, left with a golden handshake of $187,000 as well as $30,000 in director fees.
