The Future Of Ansett, Post Election?
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Calling the bluff on two Ansett wish lists
Comment by TERRY McCRANN
20nov01
A DECISION on Ansett is almost literally locked in limbo with John Howard's new cabinet.
That's to say, Howard's focus has been entirely on working out the shape of his new government.
When that's decided, he can and will sit down with John Two -- his coalition deputy and transport minister John Anderson -- to essentially make a decision on the two wish lists.
These lists have come from Anderson's meetings with the Two Marks -- Ansett administrators Mentha and Korda -- and the two main-chancers, Solomon Lew and Lindsay Fox.
It's important to understand they have separate, albeit linked, wish lists.
It is the Two Marks that actually want the Government to effectively gift Ansett creditors the now-sacred $195 million of taxpayer money.
Depending on how you see things, that's either to complete a very successful administration, generating up to 35-40c per dollar for unsecured creditors over and above the full payment to staff.
That would be staggering successful, considering that these creditors faced getting the big zip, at the fall of Ansett back in September.
Alternatively, it's desperately needed to get the Two Marks off the hook with those creditors for running the airline deep into losses. That if the Government does not hand creditors some taxpayer money, those creditors might end up getting zip, when they might have got some return on a speedy liquidation yesterday.
In contrast, the wish list from the two main-chancers is about more practical matters -- Ansett's operating certificate, accelerated depreciation, and putting Qantas on a competition leash.
The one unanswered puzzle in all this is: why was the $195 million deal made a condition precedent to the sale of Ansett to Lew-Fox, if it's essentially irrelevant to them?
It tends to suggest that it is linked and, if so, the link must be the -- attractive? -- price they are paying for the Ansett business.
Now although the Two Johns have yet to meet, their statements made it clear that they will not just give Ansett -- its creditors -- the $195 million.
They will quite rightly insist that if it paid over to guarantee departing staff get their minimum entitlements, the Government will then be a priority creditor for repayment.
This will still be something of a handout, because it would mean the Government funding the basic community redundancy payout ahead of the company's assets being used for the extra benefits under their employment conditions.
But it would be justifiable in the wake of the interesting times that airlines now operate in, after September 11.
Indeed, a case could be mounted for a direct grant, albeit, much less than the big figure, in the interests of keeping Ansett in business.
That is why it is possible the Government could end up handing over the $35 million to $40 million-or-so that would be raised by the $10 ticket levy through to, say, the end of January.
But if it did that, it would have to insist on getting the $195 million back, in full.
Handing over the ticket levy money would get the Government off the absolutely fallacious, supposed 'double-dipping' hook. And so kill two birds with one stone.
Although the Fox-Lew wish list is more functional, it also has some serious problems.
The Government won't give their Ansett special tax concessions. They'd have to go to all airlines, and indeed, all business equally.
There is no way business should endorse the much tougher competition law Fox-Lew want to strangle Qantas with. That's before examining some of the more ambitious ambit claims they have made.
In sum, once the Two Johns get time to resolve it, they should essentially call the bluff of the two Marks and the two main-chancers.
That yes, they will inject some taxpayer money. But if Lew and Fox want to own and run an airline, they have to put their money where their mouths are. Their own money.
Comment by TERRY McCRANN
20nov01
A DECISION on Ansett is almost literally locked in limbo with John Howard's new cabinet.
That's to say, Howard's focus has been entirely on working out the shape of his new government.
When that's decided, he can and will sit down with John Two -- his coalition deputy and transport minister John Anderson -- to essentially make a decision on the two wish lists.
These lists have come from Anderson's meetings with the Two Marks -- Ansett administrators Mentha and Korda -- and the two main-chancers, Solomon Lew and Lindsay Fox.
It's important to understand they have separate, albeit linked, wish lists.
It is the Two Marks that actually want the Government to effectively gift Ansett creditors the now-sacred $195 million of taxpayer money.
Depending on how you see things, that's either to complete a very successful administration, generating up to 35-40c per dollar for unsecured creditors over and above the full payment to staff.
That would be staggering successful, considering that these creditors faced getting the big zip, at the fall of Ansett back in September.
Alternatively, it's desperately needed to get the Two Marks off the hook with those creditors for running the airline deep into losses. That if the Government does not hand creditors some taxpayer money, those creditors might end up getting zip, when they might have got some return on a speedy liquidation yesterday.
In contrast, the wish list from the two main-chancers is about more practical matters -- Ansett's operating certificate, accelerated depreciation, and putting Qantas on a competition leash.
The one unanswered puzzle in all this is: why was the $195 million deal made a condition precedent to the sale of Ansett to Lew-Fox, if it's essentially irrelevant to them?
It tends to suggest that it is linked and, if so, the link must be the -- attractive? -- price they are paying for the Ansett business.
Now although the Two Johns have yet to meet, their statements made it clear that they will not just give Ansett -- its creditors -- the $195 million.
They will quite rightly insist that if it paid over to guarantee departing staff get their minimum entitlements, the Government will then be a priority creditor for repayment.
This will still be something of a handout, because it would mean the Government funding the basic community redundancy payout ahead of the company's assets being used for the extra benefits under their employment conditions.
But it would be justifiable in the wake of the interesting times that airlines now operate in, after September 11.
Indeed, a case could be mounted for a direct grant, albeit, much less than the big figure, in the interests of keeping Ansett in business.
That is why it is possible the Government could end up handing over the $35 million to $40 million-or-so that would be raised by the $10 ticket levy through to, say, the end of January.
But if it did that, it would have to insist on getting the $195 million back, in full.
Handing over the ticket levy money would get the Government off the absolutely fallacious, supposed 'double-dipping' hook. And so kill two birds with one stone.
Although the Fox-Lew wish list is more functional, it also has some serious problems.
The Government won't give their Ansett special tax concessions. They'd have to go to all airlines, and indeed, all business equally.
There is no way business should endorse the much tougher competition law Fox-Lew want to strangle Qantas with. That's before examining some of the more ambitious ambit claims they have made.
In sum, once the Two Johns get time to resolve it, they should essentially call the bluff of the two Marks and the two main-chancers.
That yes, they will inject some taxpayer money. But if Lew and Fox want to own and run an airline, they have to put their money where their mouths are. Their own money.
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Our friend Terry McCrann, as usual, gets it in one.
His article above is his usual erudite undressing of the "usual suspects".
Two Johns v the two main chancers, I know where I've got my money.
The 2 Marks had better not drop the staff creditors ball or they will definitely be short of a couple themselves. Still they could always join the Vienna Boys Choir.
They were warned very early on, but it seems the old 'eau de kero' works in turning accountants brains to mush, as easily as it does aviation types.
His article above is his usual erudite undressing of the "usual suspects".
Two Johns v the two main chancers, I know where I've got my money.
The 2 Marks had better not drop the staff creditors ball or they will definitely be short of a couple themselves. Still they could always join the Vienna Boys Choir.
They were warned very early on, but it seems the old 'eau de kero' works in turning accountants brains to mush, as easily as it does aviation types.
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Thurs "Melbourne Age"
Canberra stops short on Fox-Lew demands
By LEONIE WOOD
AND SOPHIE DOUEZ
Thursday 22 November 2001
The Federal Government is today expected to tell Melbourne businessmen Solomon Lew and Lindsay Fox that it has stopped short of fully endorsing their $1.1 billion bid for Ansett by granting only some of their requested investment incentives.
The government is also expected to tell Ansett's administrators that it will not back down from its demand that a $195 million loan to cover employee entitlements must be repaid in full and that the government will rank alongside the airline's employee creditors.
The government's stand on the loan means it is now almost certain that non-employee creditors, such as banks, oil companies, trade creditors and thousands of passengers, will get back only a few cents in the dollar from the airline's collapse.
Deputy Prime Minister and Transport Minister John Anderson will host a meeting with Mr Fox, Mr Lew and their representatives at Parliament House late this morning.
A spokesman for Mr Anderson said the government would make it abundantly clear what it was prepared to offer the Fox-Lew bid.
"It is better they hear it from us rather than read it in the newspapers," the spokesman said.
Mr Fox and Mr Lew set a deadline of November 23 for the government's commitment.
Their demands included relief from withholding tax, accelerated depreciation allowances, and certainty over the transfer of Ansett's certificates and operating licences.
They also requested concessions on lease arrangements at the Sydney airport terminal, which is owned by the government.
It is believed a letter outlining the government's position will be delivered to the administrators' offices later today.
The government's advance of $195 million is specifically intended to cover some of the estimated $400 million owing to 8000 Ansett workers who have been made redundant.
The employees were due to get their first payments on November 19.
Ansett collapsed on September 12 owing creditors more than $1.5 billion.
[ 21 November 2001: Message edited by: Wirraway ]
Canberra stops short on Fox-Lew demands
By LEONIE WOOD
AND SOPHIE DOUEZ
Thursday 22 November 2001
The Federal Government is today expected to tell Melbourne businessmen Solomon Lew and Lindsay Fox that it has stopped short of fully endorsing their $1.1 billion bid for Ansett by granting only some of their requested investment incentives.
The government is also expected to tell Ansett's administrators that it will not back down from its demand that a $195 million loan to cover employee entitlements must be repaid in full and that the government will rank alongside the airline's employee creditors.
The government's stand on the loan means it is now almost certain that non-employee creditors, such as banks, oil companies, trade creditors and thousands of passengers, will get back only a few cents in the dollar from the airline's collapse.
Deputy Prime Minister and Transport Minister John Anderson will host a meeting with Mr Fox, Mr Lew and their representatives at Parliament House late this morning.
A spokesman for Mr Anderson said the government would make it abundantly clear what it was prepared to offer the Fox-Lew bid.
"It is better they hear it from us rather than read it in the newspapers," the spokesman said.
Mr Fox and Mr Lew set a deadline of November 23 for the government's commitment.
Their demands included relief from withholding tax, accelerated depreciation allowances, and certainty over the transfer of Ansett's certificates and operating licences.
They also requested concessions on lease arrangements at the Sydney airport terminal, which is owned by the government.
It is believed a letter outlining the government's position will be delivered to the administrators' offices later today.
The government's advance of $195 million is specifically intended to cover some of the estimated $400 million owing to 8000 Ansett workers who have been made redundant.
The employees were due to get their first payments on November 19.
Ansett collapsed on September 12 owing creditors more than $1.5 billion.
[ 21 November 2001: Message edited by: Wirraway ]
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No govt funding for Ansett bid
From AAP
22nov01
THE bid by businessmen Lindsay Fox and Solomon Lew to take over Ansett would get no federal government financial assistance, by mutual agreement, Transport Minister John Anderson said.
After a meeting with the pair, Mr Anderson said all outstanding issues had been resolved apart from two regulatory issues which he would not detail.
The Fox-Lew bid for the collapsed airline originally sought substantial government assistance.
Issues resolved included orderly approval of air operator certificates, arrangements for entitlements for workers transferring to Ansett Mark II and cross-ownership of airports, but financial assistance such as depreciation allowances and other tax breaks did not come up.
"To be fair to these gentlemen, they've fully understood and accepted and made the point that any of those things that you did would have to be done for the entire industry, not for one player," Mr Anderson said.
"We've resolved nearly all the outstanding issues, there are two that remain.
"We've determined that all we'll say about those at the moment is that they go to the heart of the competitive environment that Tesna (the Fox-Lew consortium) would operate in, given that they believe very strongly they have to have an environment in which they're given a fair chance to grow and expand.
"That's something we've agreed to take forward and try to reach final resolution on by the middle of next week."
Mr Anderson said the Trade Practices Act was under review but industry players were looking for appropriate competition arrangements in the meantime.
"That's the area we've got to explore," he said.
Mr Lew said the meeting with Mr Anderson nutted out most points.
Asked whether this meant the bid would now proceed, he said: "We've signed a transaction with the administrators, so therefore we have somewhat bought Ansett but it does have conditions."
Those conditions were confidential between Tesna and the administrators.
Mr Lew said he was confident Tesna would take over on January 31.
Mr Anderson said handling of the $195 million federal loan for workers' entitlements was an issue between the Government and Ansett administrators, not between the Government and Fox-Lew.
He was confident the $3.6 billion deal would proceed.
"Yes, I have every confidence and belief that the commercial forces at play here can be brought to fruition," Mr Anderson said.
The status of a rival bid by Virgin Blue and Lang Corporation was in limbo.
Mr Anderson said he would meet Virgin-Lang in coming days.
Mr Lew said Fox-Lew had a signed agreement with the administrators and creditors had ticked off the deal.
Ahead of the meeting Mr Anderson said the Fox-Lew plan should proceed.
"Let's be frank about this, the creditors looking at this would recognise there's one strong bid in the marketplace that gives them a chance of some return," he said.
"They'd be mad to knock it back, I would have thought."
From AAP
22nov01
THE bid by businessmen Lindsay Fox and Solomon Lew to take over Ansett would get no federal government financial assistance, by mutual agreement, Transport Minister John Anderson said.
After a meeting with the pair, Mr Anderson said all outstanding issues had been resolved apart from two regulatory issues which he would not detail.
The Fox-Lew bid for the collapsed airline originally sought substantial government assistance.
Issues resolved included orderly approval of air operator certificates, arrangements for entitlements for workers transferring to Ansett Mark II and cross-ownership of airports, but financial assistance such as depreciation allowances and other tax breaks did not come up.
"To be fair to these gentlemen, they've fully understood and accepted and made the point that any of those things that you did would have to be done for the entire industry, not for one player," Mr Anderson said.
"We've resolved nearly all the outstanding issues, there are two that remain.
"We've determined that all we'll say about those at the moment is that they go to the heart of the competitive environment that Tesna (the Fox-Lew consortium) would operate in, given that they believe very strongly they have to have an environment in which they're given a fair chance to grow and expand.
"That's something we've agreed to take forward and try to reach final resolution on by the middle of next week."
Mr Anderson said the Trade Practices Act was under review but industry players were looking for appropriate competition arrangements in the meantime.
"That's the area we've got to explore," he said.
Mr Lew said the meeting with Mr Anderson nutted out most points.
Asked whether this meant the bid would now proceed, he said: "We've signed a transaction with the administrators, so therefore we have somewhat bought Ansett but it does have conditions."
Those conditions were confidential between Tesna and the administrators.
Mr Lew said he was confident Tesna would take over on January 31.
Mr Anderson said handling of the $195 million federal loan for workers' entitlements was an issue between the Government and Ansett administrators, not between the Government and Fox-Lew.
He was confident the $3.6 billion deal would proceed.
"Yes, I have every confidence and belief that the commercial forces at play here can be brought to fruition," Mr Anderson said.
The status of a rival bid by Virgin Blue and Lang Corporation was in limbo.
Mr Anderson said he would meet Virgin-Lang in coming days.
Mr Lew said Fox-Lew had a signed agreement with the administrators and creditors had ticked off the deal.
Ahead of the meeting Mr Anderson said the Fox-Lew plan should proceed.
"Let's be frank about this, the creditors looking at this would recognise there's one strong bid in the marketplace that gives them a chance of some return," he said.
"They'd be mad to knock it back, I would have thought."
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Fox, Lew Ansett plan flies
By STEVE CREEDY and RICHARD GLUYAS
23nov01
THE Solomon Lew-Lindsay Fox bid for Ansett is poised to proceed after the syndicate substantially wound back its claims for federal Government support.
The syndicate led by the Melbourne-based millionaires will receive no financial assistance from the Government.
But it has resolved issues about the approval of its air operator's certificate, arrangements for employee entitlements, landing and take-off slots, and exemptions from provisions preventing cross-ownership of airlines and airports.
Deputy Prime Minister John Anderson emerged from a 90-minute meeting with Mr Lew and Mr Fox confident that two remaining competition law issues could be resolved by next week and that the $3.6 billion deal would proceed.
"I have every confidence and belief that the commercial forces at play here can be brought to fruition," Mr Anderson said.
The news was backed by an Australian Competition and Consumer Commission announcement that it would widen its investigation into anti-competitive behaviour in the aviation industry.
The Fox-Lew syndicate has sought protection against potential predatory practices through changes to the Trade Practice Act and the introduction of a "cease and desist" power similar to that in the telecommunications industry.
The Government announced in the election campaign earlier this month that it would review the competition provisions of the act, leaving it the option of introducing interim measures to placate the Fox-Lew syndicate.
One source said legislative changes would not be needed to give the syndicate sufficient comfort to proceed.
Federal cabinet meets next Tuesday and there is an expectation the remaining issues could be resolved by the middle of next week.
Mr Anderson praised the the two businessmen for accepting the Government's point that financial and tax concessions would have to be applied industry-wide.
The Lew-Fox syndicate had already distanced itself from a claim by the administrators for a $195 million grant for worker entitlements and apparently did not press a claim for accelerated aircraft depreciation and other tax breaks.
The Government has written to the Ansett administrators, reaffirming they must repay any advanced money used to cover employee entitlements.
Mr Anderson said the Government would not relinquish the normal statutory priority applied to repayment under the Special Employment Entitlements Scheme for Ansett employees (SEESA) scheme.
He said SEESA and the underpinning ticket levy were never intended to be used to meet Ansett's liabilities or unsecured creditors.
"SEESA is a safety net for employees, not taxpayer funds to be used at the discretion of the administrators," he said.
Singapore Airlines says it has no immediate intention of investing in Ansett.
By STEVE CREEDY and RICHARD GLUYAS
23nov01
THE Solomon Lew-Lindsay Fox bid for Ansett is poised to proceed after the syndicate substantially wound back its claims for federal Government support.
The syndicate led by the Melbourne-based millionaires will receive no financial assistance from the Government.
But it has resolved issues about the approval of its air operator's certificate, arrangements for employee entitlements, landing and take-off slots, and exemptions from provisions preventing cross-ownership of airlines and airports.
Deputy Prime Minister John Anderson emerged from a 90-minute meeting with Mr Lew and Mr Fox confident that two remaining competition law issues could be resolved by next week and that the $3.6 billion deal would proceed.
"I have every confidence and belief that the commercial forces at play here can be brought to fruition," Mr Anderson said.
The news was backed by an Australian Competition and Consumer Commission announcement that it would widen its investigation into anti-competitive behaviour in the aviation industry.
The Fox-Lew syndicate has sought protection against potential predatory practices through changes to the Trade Practice Act and the introduction of a "cease and desist" power similar to that in the telecommunications industry.
The Government announced in the election campaign earlier this month that it would review the competition provisions of the act, leaving it the option of introducing interim measures to placate the Fox-Lew syndicate.
One source said legislative changes would not be needed to give the syndicate sufficient comfort to proceed.
Federal cabinet meets next Tuesday and there is an expectation the remaining issues could be resolved by the middle of next week.
Mr Anderson praised the the two businessmen for accepting the Government's point that financial and tax concessions would have to be applied industry-wide.
The Lew-Fox syndicate had already distanced itself from a claim by the administrators for a $195 million grant for worker entitlements and apparently did not press a claim for accelerated aircraft depreciation and other tax breaks.
The Government has written to the Ansett administrators, reaffirming they must repay any advanced money used to cover employee entitlements.
Mr Anderson said the Government would not relinquish the normal statutory priority applied to repayment under the Special Employment Entitlements Scheme for Ansett employees (SEESA) scheme.
He said SEESA and the underpinning ticket levy were never intended to be used to meet Ansett's liabilities or unsecured creditors.
"SEESA is a safety net for employees, not taxpayer funds to be used at the discretion of the administrators," he said.
Singapore Airlines says it has no immediate intention of investing in Ansett.
