Godfrey: No Deal with Tesna

[Wonderworld]

Ooooohhhh Boeing Bellys a bitch!!!!!!

[MT Edelstone56]

Regarding AN knockbacks of QF pilot jobs.

Probably no regrets Sopwith.

ExAN Sydney siders,APA committee members and some others have jumped at the chance.

Personally,my preference would be AN(to be domiciled in OZ) then Emirates and Dragon.Coming in last would be QF.Would sooner leave the industry than fly for VB.

No offence meant but QF not desirable because of the culture and being an S/O;Sydney another factor.Many friends in QF who concur.

[Whiskery]

Thumbs -

[quote] Sprucy, we both know that it would be an odds on bet that only one of us will be flying in a years time,if I had my way I would have liked us to merge, amalgamate, or something. <hr></blockquote>

Do you honestly reckon (if Ansett get up) you'll (Ansett?) be flying in a years time?

I'll take a piece of that action, anywhere, anytime, but you have to have your bet laid no later than Monday 25th @ 1400 hrs.

oicur12 -

[quote]Sounds to me like the DJ statement is leaving the door open for a future friendship.

<hr></blockquote>

........wishful thinking Pal!

Boeing Belly - the only reason QF is having "on time departure" problems out of Sydney is because of terminal congestion due to ex AN customers trying to get a seat on QF.

[ 23 February 2002: Message edited by: Whiskery ]</p>

[MT Edelstone56]

Whiskerey

Where do your interests lay in Oz aviation?

Do you or a relative work in the industry?

Shares?

Just curious.Credibility etc.

[Whiskery]

Muckey Duck

Curiosity killed the cat !

I don't have a problem with my credibility - if you do, suggest <a href="http://www.aviationforum.com.au." target="_blank">www.theaviationforum.com</a>

Keep the faith:]

edited for wrong URL address. I try never to give people duff gen!

[ 23 February 2002: Message edited by: Whiskery ]</p>

[Boeing Belly]

Whiskery- precisely! But the pax don't give a toss about the cause of the problem. If they think it'll be better somewhere else they'll give it a go.

[MT Edelstone56]

Whiskerey,

My name is Duck Muck,please use it.

Disinterested in your credibility,just an insight into your agenda.We model ourselves on American society so agendas precede honourable intentions.

Your selective posting of media has my curiosity.No luck with your link.

Regards Duck Muck.

[Whiskery]

Daffey Duck - my apologies, I didn't realise you were American.(thought I was dealing with another aussie!)

I am about to whip out for a feed of cod and chips + a pint of Boddingtons lager @ the Jubilee Oak in Crawley, United Kingdom. This exercise will set me back Ł8.50 (25 Oz dollars!).

If I were in Melbourne now I could get the same meal down at the MCG for 1/2 the price. (Flake,min chips & a pint of Victoria Bitter!)

Moral of the story:

If you want a cheap meal of fish & chips and a cold beer, dine at the MCG and not the Jubilee Oak.

Are you with me Muckey ?

edited: sorry about the URL Daff - I can't get it either from this end. Was working in Oz before I left. Maybe it don't work from UK and USA?

[ 23 February 2002: Message edited by: Whiskery ]</p>

[Nose Wheel]

Thanks for the ML site link Wirra - interesting that QF only had a 50% on time average for the day...DJ about 70% on time and as you rightfully pointed out...... 100% ontime for AN or earlier.. . <img src="wink.gif" border="0">

[Wayne Birch]

On time performance is easy to achieve. The main factors that effect it is how many passengers there are. If any person contributing to this forum has or is working for an airline should know that when the planes are full or near full every time, the facilities and man power are stretched to the limit. Thus, making it harder to achieve on time performance.. .If the planes are half empty they will go out on time everytime.. .The bosses are happy to have slight delays for full aircraft.

[Liverlittle]

I would agree, unless you happen to fly regularly out of LHR, where the time to board/ missing pax delays are insignificant against the delays due airfield congestion, weather, atc slot, check-in computer failure, broken-down airbridge...you name it!. .

[fire wall]

boeing belly, the 767 is limited to 350kts/.825.....at least the ones I flew for 9 years......and no they were not AN 767's.. .Keg, you need that myopic condition seen to. A good dose of fiscal hardship usually does the trick and is rumoured to be prescribed shortly whether you like it or not. Time to cash those shares QF in.. .Good luck to the boys in the tessna deal, however I wouldn't be signing too many mortgages yet for someone will fall, just a matter of who.

[Boeing Belly]

Rampsuper- I partly agree with you. But also I think it is a mindset problem as well. I remember hundreds of times sitting in an aircraft that was 70% full 5 minutes after departure time had come and gone waiting for connecting pax, connecting F/As, fail-to-boards, congested tarmacs, tug drivers that had gone walk-about, engineer headsets that didn't work, Golden Wing members that wouldn't leave the lounge until he'd finished his call etc,etc. Thats all gone now. Many of the AN flights are 100% full and they still leave on time. The difference in attitude shown by ALL staff now is amazing. They've had a fire lit under their bums and it seems to be working.

[The Flying Lad]

M0.825? That's a bit slow, Boeing & Janes All the World's Aircraft quote M0.86.

Flying SYD-CNS, we were at M0.84 to make up lost time.

You sure that wasn't an 'economic' speed limit?

Cheers,

Justin

[MT Edelstone56]

Whiskerey

Got it,google searched.

ExRAN,ExVietnam,DSO,very impressive.Bushranger?

If the above mistaken credentials,I apologise,a spurious google.

[Wirraway]

NineMSN "Business Sunday"

-McCrann (Comment). .-Godfrey (Interview). .-Dixon (Interview)

LEW AND FOX DECISION TIME . . . .24 February 2002 . . . .Terry McCrann . . . . "we just didn’t quite see this thing working. We didn’t share the vision and no doubt and likewise, Tesna would have had some concerns as well" . . . . . .Good morning

And especially to Solomon Lew and Lindsay Fox, today is decision time. After nearly four months of assorted p-r stunts some misguidedly involving politicians named Simon and Steve nearly four months of almost buying Ansett today is when Lew and fox Finally have to decide. Will they start tearing up 100-dollar bills and just keep tearing twenty- four hours a day every day.

Last week I said it made no sense to buy Ansett unless you merged with Virgin and if you merged with Virgin it made no sense to buy Ansett our studio guest today Virgins’ Brett Godfrey came to the second conclusion on Friday. Will Lew and Fox now come to the first indeed will they be allowed to even make the decision. their single biggest investor canny us airline player David Bonder-man forced sorry brought them and Virgins’ Richard Branson together two weeks ago. I doubt he Intends to Join Lew and Fox tearing up Hunfded dollar bills even the smaller Aussie ones.

Will the Commonwealth Bank provide the debt finance. If Lew and Fox actually proceed they will lose a heap of money. And ultimately their new Ansett would follow the old Ansett just as Compass two followed Compass one to that great airline graveyard in the sky. Twenty years ago Rupert Murdoch bought Ansett to get a TV station Melbourne’s Channel Ten. It proved fabulously successful. Lew and Fox had a similar good idea to buy Ansett to get Australia’s pivotal terminal dirt cheap. It was a good idea back in September, not now in February.

I’m Terry McCrann

INTERVIEW: BRETT GODFREY, CEO, VIRGIN BLUE . . . .24 February 2002 . . . .Ali Moore . . . .Brett Godfrey, CEO of Virgin Blue, will be talking to Ali Moore live in the studio on the collapse of the talks with Tesna holdings over Ansett. . . . . . .Brett Godfrey, CEO, Virgin Blue and Ali Moore

Reporter: What exactly has been on the table with your talks with Tesna?

Brett Godfrey: I think we went through the full spectrum of opportunities between the two airlines Ali, ranging basically just from some commercial alliances of sorts to a merger.

Reporter: How serious were you?

Brett Godfrey: I think we were very serious and we’re always serious when we go into these types of discussions. It is just a case of a long the way we’ve had discussions with Air New Zealand before as you are aware and others, we don’t like to waste our time, we don’t like to waste others peoples time, we’re always trying to get the best outcome for our people and our shareholders, so from that point of view we’re deadly serious.

Reporter: Well presumably the amount of money being talked about would have been more then the 250 million cheque that Richard Branson ripped up last year?

Brett Godfrey: Well I think you would be safe to assume that the two entities put together, there was some valuation there that would see that being a fairly small amount compared to what this deal could have been worth. Again at the end of the day it comes down to what we think is best for our financial interest and those of our staff and those of our customers, and we just didn’t quite see this thing working. We didn’t share the vision and no doubt and likewise, Tesna would have had some concerns as well.

Reporter: But it was you who pulled the pin?

Brett Godfrey: I think, you know, in a deal you can have a situation where someone can claim to pull the pin, let’s just say we didn’t get what we wanted, they didn’t get what they wanted and we felt it was probably best both parties to disengage.

Reporter: And yet you kept talking for some time?

Brett Godfrey: Well you know putting two airlines together with very different cultures and very different business models, and very different principals is a complex task at the best of times, and to do it right and to make sure it was going to work we felt that the due diligence process of a couple of weeks was worth the effort and nothing was wasted on this, we both had interesting information out of each other and I think that’s going to help both airlines for going forward.

Reporter: But weren’t the problems patently obvious from the start, I mean, number one being why would Richard Branson put his one aviation success story into what is now a loss making venture and is likely to be for some time?

Brett Godfrey: Well I think that is right and I think that is a very crucial point. Let’s just say maybe from the outset we weren’t looking at a merger situation. Perhaps both parties were looking at a controlling stake. Tesna were bringing some sizeable and significant assets to the table, we were bringing what we felt was an airline with a substantive and a very profitable base to grow from, and so I think both parties perhaps had fairly high opinions of themselves, but at the end of the day we weren’t prepared to seek control and I gather the same from Tesna, so you know, the parties can’t both have 51 percent.

Reporter: Now it is really surprising I guess, that you even talked for as long as you did?

Brett Godfrey: Well no, because there were opportunities there and we felt that we were going to get the result that we wanted and I guess they themselves felt that. I mean 50/50 didn’t have to be the only arrangement in place between the two airlines and again there was some very interesting issues. When It came down to bringing on 1500 of their staff to only 1300 of ours, we would have a culture melt and I’m not sure we liked. We would have had a situation where the airline is, and there is no disagreement that it is losing a lot money today, we would have had to helped absorb those costs and we were looking at marketing strategies and proposals that could have mitigated or removed much of those, but look, as we said at the end of the day out interests and their interests are best served separate.

Reporter: While without you will Tesna get up?

Brett Godfrey: Oh, I think they’ve made it patently clear that that is what they are going to do, and I think I would be a little surprised at the 11th hour for it not to happen. As I have said before there is a couple of fairly well regarded businessmen involved in this airline and I don’t think their reputation is going to slip by not starting on this airline, I think that it will get up.

Reporter: It will get up, but how long will it last? How do you see them surviving, I mean you’ve got 13 percent of the market, Qantas has got around 80, where are their passengers going to come from to get the 25 percent that they need?

Brett Godfrey: Well I don’t think the market can be stimulated too much more unless we go back to $33 fares and those days where our competitors were screaming fare wars, and we were saying well it is just deep discounting, I think in that inevitable situation which we will go through to some degree, I think we are well hedged, well protected. I’m not so sure that their cost structure base nor Qantas' for that matter can go down to those fare levels and not lose a lot of money. So I think they are going to have to take passengers off Qantas, they are going to target the top end and they will target our passengers as well. So they are going to have to take some of the pie, they are not going to be growing the pie. We came to the market and substantially increased the size of that pie by about 20-25 percent, and so there was enough for us. This is not a new airline model, this is an existing airline model, it has been redefined but it is the same as a bunch of other airlines all throughout the world, and from that point of few they are going to have to pilfer from the other two carriers, there is now doubt.

Reporter: Well if they do get up what sort of a loss do you think three airlines is going to mean for you, say in the first three months?

Brett Godfrey: Oh, I don’t envisage losing any money at all. I mean lets not forget here Virgin made money last year when it has Ansett operating nearly 100 aeroplanes.

Reporter: Well what is it going to cost you I should say, I mean how much is it going to cost the blood bath that Mr Dixon talks about?

Brett Godfrey: Well again perhaps I’m a little bit optimistic but I’ve always felt that we have been conservative in our numbers, we never expected to make money as soon as we did. We never expected to attain the load factors or yields that we have and so conservatively speaking, I don’t believe we’re going to be changing our business model one iota this year. I think our business model hasn’t changed from day one and I envisage us still making more money next year then we made this year. You know, we are on track to make in excess of 30 million dollars to the year end of March and we will do better than that next year, whether Ansett is in the market or not.

Reporter: And you are still looking for a minority partner?

Brett Godfrey: Yeh, we are but it is one of those things, we’ve just turned down a deal which as you correctly said was probably worth more then the 250 that Air New Zealand offered us to go away, and so we have our minds strategically set on doing some things perhaps in the not too distant future. Whether it is a minority shareholding or whether we go straight to the market, there is too much uncertainty for probably either of those at this point in time but we certainly have a couple of things in our back pocket that we are ready to pull if need be.

Reporter: Any chance that Mr Bondaman or Mr Franky might switch allegiances? I mean obviously he thought it was worth Tesna talking to you?

Brett Godfrey: Well I think everyone from that side and our side felt it was worth talking . Will they switch allegiances – I don’t think so. I think if anything we could look at a situation where they will have to put up a sizeable amount of change. I would assume in the next few days. That’s probably going to be the more interesting element. I don’t see them coming on board with us but then again we haven’t had those sorts of discussions.

Reporter: Have you run out of options in terms of getting a private equity partner, is that why perhaps float first is the best option?

Brett Godfrey: No, I mean we’ve always said private equity would only come on board if we could find the right partner who doesn’t just bring some money to the table, they bring something that is of value in a float. The real retail value of an airline won’t be done through a private sale it will be down through a private flotation process, and so we are adamant that that’s the ultimate goal. In the interim if we can find someone that actually brings further credibility to our model which to some degree was more relevant 12 moths ago, when we were talking about this. Today I think we‘ve got a staff and a management team that have shown that we can compete against one of the best airlines in the world, one of the only profitable airlines in the world which is Qantas, so we’re holding our end up and if we go down that path it will only because we see it adding strategic value to the ultimate purchase price or the sell down price of Virgin.

. .END

. . . . February 24, 2002 . . . . . .AIRLINE INDUSTRY UPDATE . . . .24 February 2002 . . . .Helen McCombie . . . . "I believe that people who have negotiated for so long will probably go ahead with this" . . . . . .Lower profit, lower dividend and a share price that went south quickly … and then recovered as investors questioned, then liked, the outlook for Qantas, especially with Ansett's rebirth looking more and more problematic, leaving Virgin as the only serious contender.

Qantas' international operations lost money in first the half, but its domestic airline business saw profits up 50 percent, while other businesses rose almost 60 percent.

The dividend was dropped from 11 to eight cents a share.

Helen McCombie talked to CEO Geoff Dixon. . . . .Geoff Dixon, CEO, Qantas and Helen McCombie

Geoff Dixon: Certainly I think a lot of people believe and I’ve used in speeches that we’re a bit of a magic pudding, that you can just keep coming at Qantas and Qantas will continue to exist and do everything correctly. Even they think it is very hard and I think people should be realising that we’ve worked very hard and our people have worked very hard to get to the position we are in.

Reporter:The union movement seems to favour the possibility of two and a half or three thousand people keeping their jobs at Ansett as opposed to tens of thousands at Qantas?

Geoff Dixon: Well, that is a bit harsh too I but I do think that they’re much more anxious to fix up a few jobs in Ansett then they are to make sure that Qantas will be efficient and profitable into the future and I think that is very, very important and as you said earlier it is very important for the government to and other people to realise that profitable airlines that can make a go of it should be supported the same as ones that are going out of business.

Reporter:Given all the attention that Ansett has got do you think it will fly?

Geoff Dixon: I only have got to believe what the people are saying and I think Mr Fox and Mr Lew are very serious people as I said before. And I do think it probably will fly but I don’t know, I’m not party to any of the discussions. What I am party to is a lot of the criticism that Qantas occasionally gets for how we’re supposedly conducting ourselves and I keep saying we’ve been here for eighty one and a half years, we’ve never been proven to do anything unethical. We are strong competitors but at the moment newspapers in particular, some of them seem to say well, look we’re predators one day and that’s for putting the prices down, and when we’ve put the prices up if we do we’re gougers, and that’s a very, very hard one to take particularly when so many people have worked so hard within Qantas to put us in the position where we are.

Reporter:You’ve said that you believe Ansett will rise from the Ashes, is that a gut feeling?

Geoff Dixon: No it is not a gut feeling, I’m probably, maybe I’m naive, but I believe that people who have negotiated for so long will probably go ahead with this. It will be very difficult and as I said yesterday or last week, it will be an inevitable blood bath. I don’t mean that in a way of a threat, I mean it has happened every time before. I mean the obvious is that if you have too many seats and people going for a certain number of passengers, you are going to have very, very low fares and that will inevitably cause a collapse or two.

Reporter o you think it is going to be blood bath from day one?

Geoff Dixon: I hope not and I think there may be a lot more caution in the market this time but it inevitably ends up that way and it will not be started by Qantas. I was answering the question on that particular issue and Qantas is not going to go out there and start a blood bath, we don’t want to. Although we will protect our position where we think our position should be.

Reporter o you have a crisis plan from next Thursday?

Geoff Dixon: We don’t have a crisis plan, we have plans but we’re pretty prudent when it comes to that. If there is going to be a, well there is a third airline now, of course Ansett is flying but not to the extent of being run by people who know how to run an airline properly. If they get up and they are flying again we will be very, very competitive against them.

Reporter o you have an advertising campaign planned? What do you want to do?

Geoff Dixon: Yes we have an advertising campaign planned, but we will wait to see what the advertising campaign of the competitors are. I mean you often wait to see whether they are coming at us at a particular way and if they are coming at us in a particular way we have for or five different versions of advertising and responses that we will use.

Reporter:So if they start with cheap fares you will match those straight away?

Geoff Dixon: We must, I mean that just happens in this business. I mean how many we match and who we yield manage it is a different issue but yes of course we’re going to match it.

Reporter:What is the Ansett brand worth today?

Geoff Dixon: Well I don’t know. I think the Ansett brand has probably been damaged quite substantially. I don’t think there is any doubt about that and not just as result of a collapsing, I think the events of the previous 12 months when they had the maintenance problems and that, I read the other day where people said it is still a great brand and it is still has a lot to offer but I think there will be difficulties for a while, and I think the difficulties will be a little bit can they keep flying. I mean are they going to be there in 12 months time. I’m not just singling them out but I’m just saying and not just me, just about every analyst in the country is that this will be very, very aggressively fought out by three airlines and it will be very difficult given history for all of them to be there in 12 months time.

Reporter:Is Virgin Blue more of a threat then Ansett?

Geoff Dixon: It is to us, yes I think Virgin Blue‘s a threat but I regard every airline that’s sitting next to us as a threat because that is what this business is about. They’re there, they are trying to take our passengers, we’d better defend our passengers. With all due respects Virgin Blue have done a pretty good job in establishing themselves.

Reporter:How do you regard the prospects of a Virgin Blue/Tesna marriage?

Geoff Dixon: I’ll have a little bit of difficulty, I don’t know how long it would last but that’s got to be a real chance, but these things are difficult. Marriage, you mean merger, that would be very difficult . It would certainly take a while to bed down. Some sort of cooperative agreement, maybe that could work. Obviously they are talking a lot, in fact they’ve been talking for so long it means that they’ve probably got a fair ways to go at any rate before they could conclude something. I think the biggest thing here is that Richard Branson is very, very conscious of his brand and I’m not sure he is going to loosely hand that over to into some merger situation when he hasn’t got control.

Reporter o you think that Branson will sell, or is he just stringing them along like he did with Air New Zealand?

Geoff Dixon: Ah, I don’t know. I really don’t, can’t get into the mind of Richard Branson.

Reporter:But he could be stringing them along?

Geoff Dixon: I don’t think he would be necessarily stringing them along. He could be sitting there negotiating to see if there is a deal there somewhere, he’d be silly not to do that, and I think that is what he has done. Whether he’d get into bed with them as you say, as a marriage situation I have some doubts, but I really don’t know. I mean don’t know what is on the table.

Reporter: Considering all that we’ve said do you think that in a year’s time there will be you and Virgin?

Geoff Dixon: I think in a year’s time Qantas will be here, what other airlines will be here I think is in grave doubt. I think Virgin could last but then if Ansett gets back up, it’s got decent capital behind it, it makes the right decisions, maybe they could last. Maybe the three of us can but history says that is not likely.

Reporter: You must be pretty confident about the outlook to domestically over the next year:?

Geoff Dixon: No, I am do not confident about the outlook, what I am confident about is that provided we continue to make the right decisions and a whole mix of the Qantas business which is service subsidiaries like catering and holidays, and with the range of airlines we have now regionally, domestically and internationally that we can probably bring the profit that we mentioned during the week. It will be difficult, I made a point of saying that it will be difficult. And the volatility in this market and this industry could change it overnight but we’re basing that on what we know, on what we’ve got in the bank now and the first six weeks of trading and that is our view and we’ve always been very open in the way that we feel we can do something but I did say that if there is any more volatility, that will change.

Reporter: You’re confidence does seem a bit odd given that you are pessimistic about the competition in the domestic market and your yields are being affected internationally.

Geoff Dixon: No, what I said and what we’re saying is that we have factored in for the next three months what we believe Tesna or Ansett Mark II or whatever it is called, will do. After that we are not so sure because it is not, you can’t quickly get an airline up and running and they’ve only got three months or three and a half months really left of this financial year by the time they start to have a real go and it takes a while to get everything moving and I think it would take them a long time to get the consumer confidence, so we really believe that we’ve got that window of opportunity. Internationally we’ve always had a pretty good international operation. It got hit and it got hit very badly but we’re seeing some signs of life there that’s all. But our subsidies are working very well and we’re working hard on our costs.

Reporter: It seems that you could be factoring in a Tesna collapse though?

Geoff Dixon: No, certainly not. No, we’re not factoring in their collapse at all. I mean if they get up it is certainly not going to collapse before the end of this financial year. I’m assuming that is not on.

. .END

[Wirraway]

Brett Godfey:

.....When It came down to bringing on 1500 of their staff to only 1300 of ours.....

Does this mean if a merger had occured that. .Tesna would have put 1500 of their new staff. .to the wall?

Wirraway

[Arctaurus]

I still can't help feeling that about 1 % of what was discussed is being made public.

Godfrey's 1500 of them and 1300 of us comment is, however, interesting.

On the talks themselves, my understanding was that it was Virgin's bankers who organised the meeting with FLEW in the UK and not the other way around.

As for TESNA itself, a lot hinges on what happens tomorrow at the Federal Court.

I believe "effective" transfer will still occur on 01 March.

[Snakeman]

Geoff Dixon quoted from the above interview: "I keep saying we’ve been here for eighty one and a half years, we’ve never been proven to do anything unethical."

Does this mean they just haven't been caught yet?

[fartsock]

No it means that QF is dammed if they do and dammed if they dont