Air NZ on the ropes

[Wirraway]

Wed "Herald Sun". .. .Air NZ on the ropes. .By GEOFF EASDOWN. .06mar02. .. .AIR New Zealand's future remains grim, with a huge loss and debt write-off due to be announced tomorrow.. . . .Kiwi taxpayers will learn the airline has probably lost up to half of the $702 million the New Zealand Government spent to acquire its 82 per cent stake and save the cross-Tasman carrier. . .UBS Warburg analyst Timothy Ross believes the beleaguered airline will post a first-half loss of about $77.78 million. . .. .But he believes it is likely to book additional costs of $307.38 million, to take the total loss and write-offs to almost $386 million. . .. .These include a one-off $150 million payment to Ansett administrators to exit the defunct Australian carrier. . .. .With about 5.5 per cent of the airline's shares now held by BIL International and 4.5 per cent by Singapore Airlines, many analysts have scaled back their coverage of Air NZ. . .. .Others, who asked not to be named, suggested a loss before abnormals ranging from $63.5 million to $79.37 million. . .. ."Maybe more," said one. . .. .Macquarie Equities analyst Arthur Lim declined to make any prediction about the size of the loss, saying: "How long is a piece of string?" . .. ."This is the perfect opportunity to wipe off as many things as they can and draw a line in the sand," he said. . .. .Mr Ross said Air New Zealand had to come clean. "If there were any more nasty surprises it would be better to see them now," he said. . .. ."If you're going to have a bad year you might as well have a stinker." . .. .Mr Ross was more upbeat about Air NZ's second-half prospects. . .. ."It's going to be a prettier picture going forward than the carnage that's behind them," he said. . .. .He believes the carrier might achieve a second-half profit of $66.6 million, cutting its full-year loss to just over $11 million. . .. .But the question yet to be answered is whether Air New Zealand will set aside in any Ansett write-off the $65.08 million outstanding to News Ltd from the 50 per cent acquisition of Ansett. . .. .UBS upgraded the stock to a "buy" last week, but other analysts said yesterday that increased competition from Qantas, the loss of the Australian feeder service and missing out on the Star Alliance network previously provided by Ansett, would weigh against Air NZ's future earnings. . .. .New chief executive Ralph Norris yesterday acknowledged the airline's concerns about competition from Qantas. . .. .He claimed the Australian carrier was using profits from its Australian operation to undercut Air NZ on domestic air travel in New Zealand. . .. .Air NZ posted the country's largest corporate loss of $1.11 billion in the year to June 2001, after writing off its investment in Ansett. . .. .Its shares last traded unchanged at A27 on the New Zealand exchange, 1 ahead of the price at which the single share class debuted in late December. . .. .Independent adviser Grant Samuel told Air New Zealand shareholders late last year the airline faced considerable financial risk despite the government aid. . .. ."Air New Zealand will not be in a financial position to sustain any further material extended downturn in business or other adverse impact," Grant Samuel advised. . .. ."The company will be dependent on the Crown's willingness to provide further loan or equity capital . . . or to support a private placement possibly to another airline." . .. .It has a five-year plan to cut debt by $1.19 billion, and to reduce gearing to below 60 per cent with 7.8 per cent annual growth.

[Wirraway]

Wed "Australian Financial Review". .. .Furore over Clark's Ansett 'lemon' jibe. .Mar 6. .Jane Boyle. .. .The Prime Minister of New Zealand, Ms Helen Clark, who played a key role in Ansett's collapse, yesterday labelled the airline a "lemon", sparking fury from the airline's staff and unions.. .. .As Ansett employees wandered home from wakes after the airline was grounded by administrators, Ms Clark said Ansett had been a headache for Air New Zealand, which placed it in administration six months ago.. .. .Her inflammatory comments came as the ACTU said it hoped that sacked Ansett staff would be paid about half the total $730 million owed in entitlements within two months.. .. .The remarks stunned the industry, given the New Zealand Government has been forced to pump NZ$885 million ($726 million) into Air New Zealand to prevent it from collapsing under a mountain of debt.. .. ."I think Ansett was an airline with quite considerable problems which Air New Zealand foolishly bought into lock, stock and barrel without any due diligence in order to keep Singapore Airlines out," Ms Clark said.. .. ."Air New Zealand then, with pass-the-parcel, ended up with the headache, and it got out and obviously the subsequent attempts to revive Ansett haven't worked either.". .. .Union leaders were outraged at the comments. ACTU secretary Mr Greg Combet retorted: "If it's a lemon, she's had to suck on it just like a few other people.". .. .The ACTU is now considering suing Tesna for ditching its $3 billion rescue plan for Ansett and has asked its lawyers to advise on legal options. . .. .Australian Services Union branch secretary Ms Julie Bignell said Ms Clark's comments were "offensive, insulting, poorly timed and dead wrong".. .. ."Ansett failed because it was poorly managed and its management for the most part was Air New Zealand," Ms Bignell said. . .. .Ms Clark's Government and the Australian Government have been key targets for blame over Ansett's demise, after delaying approval of Air New Zealand's plan to recapitalise the airline last year through a $1 billion capital injection from Singapore Airlines.. .. .After Ansett collapsed, Ms Clark was party to a $150 million payment by Air NZ to Ansett's administrators to avoid further legal action against the NZ carrier.. .. .Ms Clark was again embroiled in controversy when she caused chaos in the trading in Air NZ shares soon after Ansett was cast adrift by advising investors to hold on to the shares, forcing a trading halt.. .. .She was subsequently forced to renationalise the carrier, diluting minority shareholders (excluding Singapore Airlines and Brierley Investments) to 7.6 per cent.. .. .After writing off Ansett's entire value last year, Air NZ is still racking up losses and is expected to post a loss of about $100 million for the December half on Thursday.. .. .Air NZ now faces a siege by Qantas Airways, which is eager to buy a stake in Air NZ and has indicated that unless it is able to do so, it will ramp up its NZ operations in competition with the NZ carrier.. .. .Meanwhile, Queensland Premier Mr Peter Beattie said yesterday that while he was sad at Ansett's demise, his Government would now focus on supporting Virgin Blue's expansion.. .. ."What we have to do is to make the best of where we are and that's why we will be doing everything we can to encourage Virgin Blue to expand," he said.. .. .Ansett's administrators have begun discussions with Virgin Blue, Patrick Corporation, Singapore Airlines and Qantas Airways among other potential buyers of Ansett's assets.. .. .The chief executive of Qantas, Mr Geoff Dixon, told staff in a memo yesterday that Qantas would give preference to former Ansett workers when recruiting.. .. ."We have already employed 600 Ansett workers. Another 400 are in the process of being recruited into a variety of roles," he said.. .. .However, he warned that Qantas could not afford to slacken off restructuring and cost cutting to make its cost base competitive with Virgin Blue's, which is 30-40 per cent lower.. .. .He said the airline's international operations were still under "extreme pressure" and Qantas had to fund a $7 billion fleet expansion program over the next three years. "Meeting these commitments will be a major challenge," he said.. .. .But he said Qantas's 85 per cent market share brought new responsibilities. "We must not show any signs of arrogance and I would ask that we all redouble our efforts to provide outstanding customer service to all our customers.". . . . <small>[ 05 March 2002, 16:16: Message edited by: Wirraway ]</small>

[Flat Side Up]

_________________________________________________. .. ."I think Ansett was an airline with quite considerable problems which Air New Zealand foolishly bought into lock, stock and barrel without any due diligence in order to keep Singapore Airlines out," Ms Clark said.. .__________________________________________________. .. .Well, that makes it quite clear that it was a spiteful spoiling ploy by AirNZ and nothing to do with reality. When you add in their breathtaking incompetence in a management role it seems tragedy was certain.

[kavu]

i would say that some of the money that they got from the government was to pay the golden handshakes to board members wanting out.. .. .so after the golden handshakes what money left over will now benefit the company. what's left of it.. .. .802 million - 100 million (GH) = 702 million. .. .Pay off ansett board members and the like. .. .702 - 200 = 502 million left to help the airline.. .. .Just a little calculation. Very rough of course but one to think about when the government spends all that money.

[Townsville Refueller]

TALKS ON AUSSIE TIE-UP. .. .Virgin Blue, Air NZ may link networks . .. .SYDNEY - Virgin Blue, Sir Richard Branson's discount airline, is in talks with Air New Zealand (Air NZ) about linking their route networks in Australia after the New Zealand carrier's former unit there collapsed.. .. .Brisbane-based Virgin Blue now corners about 15 per cent of the domestic market and flies to 16 destinations while Air NZ has four Australian gateways, the discount airline said. . .. .Air NZ's former Australian unit, Ansett Holdings, flew for the last time this week after a revival plan failed.. .. .'We are talking to Air New Zealand about how we can do affordable feed traffic from our network to their gateways in Australia,' said Virgin Blue's head of commercial operations, Mr David Huttner, in an interview.. .. .Qantas, Australia's biggest airline, now holds 75 per cent of the domestic air travel market and is seeking to expand services in New Zealand. . .. .Both Qantas and Virgin Blue had expressed interest previously in buying a stake in Air NZ, the Sydney Morning Herald said yesterday.. .. .'How does Air New Zealand get a customer from Launceston or Adelaide or Townsville or Mackay onto its network? That is where we can assist,' Mr Huttner said.. .. .'That does not mean that we are in any way going to take a stake in Air New Zealand,' he added.. .. .Virgin Blue said it still planned to expand its services to New Zealand, an objective which was first announced in April last year.. .. .These plans are not part of the current talks with Air NZ, Mr Huttner said.. .. .The New Zealand government bought 83 per cent of Air NZ to stave off insolvency after Ansett's collapse.. .. .Air NZ shares were unchanged at 34 New Zealand cents yesterday while Qantas shares fell 1.1 per cent to A$4.47. --Bloomberg News