Urgent: Skies grow dark for Air NZ, Ansett in Huge Trouble:CONFIRMED

[Wirraway]

WELLINGTON, Sept 7 (Reuters) - Richard Branson's cut-price carrier Virgin Blue said on Friday the Virgin group was keen to buy Singapore Airlines Ltd's 25 percent stake in troubled national carrier Air New Zealand Ltd.

Informal proposals have been put to the New Zealand government, while SIA and Air NZ's 30 percent owner Brierley Investments Ltd were aware of the plan which would see SIA take full control of Air NZ's loss making Ansett Australia unit.

"We made an indication that if it facilitates the whole deal, we're open to buying SIA's 25 percent stake in Air NZ," David Huttner, Virgin Blue's commercial head told Reuters.

"Singapore gets 100 percent of Ansett, we take 25 percent of Air NZ. I think it's fair to say SIA aren't going to sell if they've got to sell to Qantas so we're happy to break the deadlock."

The New Zealand government is analysing a proposal from SIA to increase its stake to 49 percent, allowing it to undertake a much needed recapitalisation of the carrier whose troubled Ansett subsidiary is losing A$1.3 million a day.

Huttner said no feedback has been received yet by the major parties involved and no formal discussions have been scheduled.

"We can't force these guys around the table but we've outlined the structure of a deal that we'd be happy to be a party to as we don't want to see a huge mess take place. It's not in our interest to see a company fall over with 15,000 jobs," he said.

No decisions have yet been made on how a deal would be funded, said Huttner, adding a range of share swap, equity deals or cash would be considered.

"That type of detail hasn't been discussed. When they're ready to sit around talking about it, we'll talk about how the best way to do it is," he said.

Virgin has played a pivotal role since it elbowed its way onto the local aviation market a year ago, slashing fares and forcing the majors to follow suit.

Billionaire Branson already has very close links with SIA, who own 49 percent of his Virgin Atlantic carrier.

"Virgin holds all the cards at the moment," Troy Angus, equity analyst at fund manager Rothschild Australia Asset Management said.

Air NZ said on Friday SIA has backed away from taking a placement of Air NZ shares at NZ$1.31 to boost its stake to 49 percent.

Air NZ's unrestricted B shares closed down nine cents at NZ$0.81 while the airline's New Zealand resident-only A shares last traded down eight cents at NZ$0.70.

[Four Points]

Ansett,s past and present management are to blame for their down fall. Please Mr Toomey you are a Big Guy pull your weight and fix this wonderfull airline Ansett's woes, today not tomorrow as tomorrow will be to late.

[Wirraway]

WELLINGTON (Dow Jones)--Air New Zealand is mired in a deepening financial crisis, the country's government appears incapable of meaningful action, and 25%-shareholder Singapore Airlines news) may end up withdrawing its lifeline.

That would leave a rescue plan to Australia's Qantas Airways or the wild-card player, Richard Branson's discount carrier Virgin Blue, which late Friday confirmed that like Qantas, it wants Singapore Airlines' 25%.

The New Zealand Stock Exchange Friday forced Air New Zealand to reveal the true extent of its financial position, which within minutes triggered a credit rating downgrade from Standard & Poor's Corp.

Air New Zealand's junk-grade long-term rating now stands at B+, down three steps from BB+, which the ratings agency defines as "adverse conditions likely to impair capacity to pay."

The rating remains on credit-watch negative.

The carrier's Australian airline, Ansett, is losing A$1.3 million a day and Singapore Airlines is no longer prepared to offer NZ$1.31 a share for up to 49% of Air New Zealand, a transaction that would help restore order to its balance sheet.

The market had been anticipating bad news, with seasoned brokers saying the statement would have come before the close of trading if it had contained reassuring information.

As it is, the airline's resident-only A-shares have fallen 33% since Thursday last week and the unrestricted B-shares have given up 36% on uncertainty about its future ownership, true financial position and recapitalization plans.

High-profile opposition politician Stephen Franks has called for Air New Zealand to be placed in receivership. Aviation analysts predicted the carrier's dream of becoming an internationally significant airline is dead.

The crux of Air New Zealand's dilemma remains its need to find the capital to fund a fleet upgrade for Ansett, estimated to cost up to NZ$5 billion over five years.

The airline's ability raise to that capital has been constrained by the government's dithering over whether to lift the 25% cap on ownership by a single foreign airline.

New Zealand Finance Minister Michael Cullen and Australia's Treasurer Peter Costello will meet in China on Saturday. An official at Costello's office said Ansett will be discussed.

Australian Prime Minister John Howard has ruled out equity assistance for Ansett, which employs 15,000 people in Australia, but hasn't dismissed the possibility of some form of financial assistance if it were requested.

But the New Zealand government's track record suggests a speedy resolution is unlikely, and probably not in time for Air New Zealand's full year results late next week.

Investment bank ABN Amro, in a report published last week, said it is a "low quality risk to bet on a government decision."

On Friday, Air New Zealand's board instructed its advisers to submit a new refinancing package and hold discussions with major shareholders and the New Zealand government before reporting back on Monday.

According to Air New Zealand, Singapore Airlines still wants to support its recapitalization and is awaiting a suitable plan.

Air New Zealand intends to report its full year results on Thursday, which will likely be bigger than the NZ$200 million net loss previously tipped, because the carrying value of Ansett is being reviewed.

Air New Zealand paid about NZ$1.3 billion for Ansett, which is now estimated to be worth NZ$500 million-NZ$700 million.

Analysts said the latest string of developments is bewildering albeit not entirely unexpected.

"There's probably about 101 ways it could pan out. It's just gotten a bit crazy," said one analyst.

Richard Branson's entry into the fray - ironic because Virgin Blue this week knocked back a bid for it by Air New Zealand - has been dismissed as nonsense in some quarters.

"He can't because Singapore Airlines owns 25% of him anyway, so in effect it would be Singapore Airlines increasing its stake in Air New Zealand," said Richard Wald, a Sydney-based transport analyst at UBS Warburg.

The Virgin Blue proposal is identical to Qantas' plan, involving Singapore Airlines selling its 25% stake in Air New Zealand and buying Ansett, which many believe is the long-term goal of its Air New Zealand investment.

Wald said either Ansett or Virgin Blue would have to exit the Australian market because it can't support three major players, and questioned whether the Australian government would allow 15,000 jobs to "go down the tubes."

Another commentator said it is possible Singapore Airlines could walk away from greater investment in New Zealand altogether, although the Singaporean carrier may just be playing hard ball to get the best deal possible.

Singapore-based analysts said they don't think Singapore Airlines will simply abandon its pursuit for bigger influence in Air New Zealand.

"They will consider it if the price is right," said an analyst at a large Singapore bank.

"At the end of the day, it's all about pricing."

Despite the recent slowdown in Singapore Airlines' core passenger and cargo businesses, it remains "strategically important" for the carrier to expand outside Singapore for long-term growth, the analyst added.

Although the market is struggling to predict the outcome of Air New Zealand's ownership tussle, the one thing it does know is that Ansett's A$1.3 million of losses a day can't be sustained indefinitely.


-By Stephen Wright, Dow Jones Newswires; 64-4-471-5990; [email protected]

(Shen Hong in Singapore, and Lily Vitorovich and Ian Pemberton in Sydney contributed to this article.)

[Tool Time]

Now let's see.
Seemingly the Australian Government should bail out a privately owned company using taxpayers' money.
Now, to then keep this company operating at least a break even, the taxpayer must fund the subsequent rise in airfares which would be necessary.
The air passenger must now pay a higher fare as well as his/her tax dollar to keep this company afloat.
Yes - makes sense. But to whom?
Not the long suffering taxpayer.
Oh - forgot - the national interest.

[No worries mate]

Ansett's problems may have started 15-20 years ago but the current mess could have been fixed 12 months ago if it wasn't for the stupidity of the NZ government. Over the last 12 months this governments response has been "we must do what is best for New Zealand and Air New Zealand". Well if this is what is best for their country I would hate to see their worst.
This government is trying to act as if they are a huge player in the world market when all they are is a small prick! A country that has a population less than Syndey. 99% of the world's population has never heard of the place and those that have only thing 2 things come from NZ, sheep and good rugby players (which at the moment they don't have).
This government has only made matters worse, with all the media following this, the public will be scared to use the services of ANZ/Ansett thereby increasing the daily losses. We are facing the loss of over 16000 direct jobs and maybe 100000 indirect jobs in Australia alone, NZ would face similar amount of job losses. All of this to save face and protect NZ.
Way to go Helen you sure have put NZ on the world map!

[Chimbu chuckles]

Kapitan M,
I accept your point ref QF etc, however my general question still stands. How can letting 40% of Australia's Domestic Aviation market go to foriegn owned companies be a good thing for Australia?
I see RB is now suggesting VB can by 'that' 25% of ANZ! SQ own about 25% of VB so we're back to square one, SQ aquires what it clearly wants!
I still believe that the vast majority of all this drama is the machinations of the big players backing the two Govts into a corner, Big business outmanoeuvring GOVT again!
My sister works at AN, at the coalface for over ten years in case your wondering, and Mr Toomey came a visiting this week to talk to the troops. His answer to every question they posed about SQ/RB/VB/ANZ etc was "I can't tell you!" ...."What,you don't know or won't tell us?"....."No, I know but I can't tell you!" ALL the information AN staff have about their possible futures comes from the media, nothing from their own management!
What percentage of North America's Domestic Aviation market, or Canada's, is owned by foriegn interests.
Pi$$weak Govt reaping their whirlwind, it sickens me.

Chuck.

[Absolutely]

No worries mate,
WELL SAID!! It's un-bloody-believable how Helen Clark can dither trying to protect her poor little national airline whilst she drags the whole bloody lot, including her national airline, into the ground. Can anyone tell me what in the hell she is thinking about???
As Terry Mcrann said in todays Sun Herald,
"Earth to Wellington, anyone home?"

[Mir3]

That giggling moron RB was approached to sell VB early in the week and agreed! The deal was done with Air NZ/Ansett. Not any where near the $250 that we were told though. Then to the amazement of those he had made a deal with he appeared on the TV ripping up a cheque nothing like the amount he'd agreed the day before to sell for. He's pissed off some pretty big fish including making a dill of himself with Singapore. Anderson "the minister for Qantas" career is now over according to Howard. When John Howard appeared on TV to say there'd be no government bailout it means the deals been done and Ansett will survive and we can all move on.

[Wiley]

Firstly, a little pop philosophy for those who are crying foul at the government’s apparent plans to bail AN out of the mire after letting OneTel sink – “Life ain’t fair and it never will be.” It’s an election year, and John Howard quite likes his current job and isn’t going to do anything that will so obviously threaten it after all the brownie points he just won with the electorate on his stance on the illegal immigrants. (The fact that we all know the Tampa people, like the thousands of illegals before them, will be quietly allowed in as soon as the election’s over is neither here nor there.)

Chimbu, I read your novel idea and was left in awe. Your plan is so damned sensible… the pollies would never go for it in a million years. It makes too much sense.

The sooner someone in authority comes out and says it clearly the better – a stable air transport system is an absolutely vital national resource for a country with Australia’s almost unique combination of huge geographic boundaries and small but widely dispersed population. None of it should ever have been allowed to fall into foreign ownership – even (maybe that should be especially) to a person who changes his citizenship after buying it.

Any taxpayer-funded bailout of Ansett short of Chimbu’s idea, where the government (read: the Australian people) regains control of the national asset for the money they put up, carries all the shortcomings that the cries to ‘forgive’ the national debts of Third World countries which have been horribly mismanaged by inept and usually grossly corrupt politicians for decades. Just as with the Third World debt, so it is with Ansett – the money’s gone somewhere. In the case of the tin pot African dictatorships now crying poor, much of it’s in the personal Swiss bank accounts of the politicians crying for their countries’ debt relief. In the case of Ansett… Well, one doesn’t have to have too deep a knowledge of history to see where it’s all gone. And it wasn’t mismanagement, at least in the first fifteen years of the downward slide, but conscious, callous asset-stripping by some very well known mega millionaires, all of whom aren’t dead yet.

I hope something like Chimbu’s idea comes to pass – and very, very soon. The last thing any of us want to see is another 500 pilots flooding the world’s pilot market, whether some of them be heroes or not. I’d also hate to see the many thousands of other staff out on their collective ears, to say nothing of the many thousands of others whose jobs rely on supplying Ansett or servicing Ansett customers when they reach their destinations. However, whichever way this goes, I believe a goodly proportion – as many as one third at a guess – won’t be with AN by year’s end, and many others won’t be their current wages and conditions packages.

Ot’s a sad and sorry situation, but one question springs to mind: has any of out wonderful media personalities stuck a microphone under the Silver Bodgie’s nose and asked him some probing questions on how he thinks his dead mate’s airline got itself into so much trouble?

- And whether he thinks he might have played a not inconsiderable role it its demise?

- Or whether any of the money he paid for his waterfront mansion was from the ‘consultancy fees’ paid to him by his sometimes colourful ‘mates’ over the years?

(It’s always intrigued me how a anyone could afford a multi million dollar mansion on one of the best parts of the Sydney waterfront, pay out his first wife in what must have been a not inconsiderable divorce settlement and still afford to live in style with the pale number two, all on a prime monster’s pension.) Good investments, maybe.

Yeah, right.

If there’s a really brave journo out there with a career death wish, he might like to ask similar (and far more) questions of the Dirty Digger (or should that be ‘Dirty Deng-ger’ these days?).

[Wirraway]

From this mornings Saturday "Melbourne Age"

A sorry saga of ownership battles and aged aircraft

By DAVID ELIAS
Saturday 8 September 2001

HOW DID ANSETT BECOME SUCH A RUST-BUCKET AIRLINE?

The seeds of Ansett's decline were sewn in the 1980s when Sir Peter Abeles, chief of the transport giant TNT, ran the airline as a personal fiefdom, taking a hand in every decision. TNT and Rupert Murdoch's News Limited acquired equal ownership after pooling resources to wrest the airline from the control of its founder, Sir Reginald Ansett.

Each had his reason. Sir Peter saw synergies with his transport business while Mr Murdoch wanted the Channel Ten television licence that Ansett then held. Having achieved this, he left Sir Peter a free hand to run the airline without interference.

Sir Peter had a global vision but he made many foolish decisions, especially in his choice of aircraft, which became a millstone around the airline's neck after his overthrow at TNT in 1991.

Ansett still finds itself flying eight types of aircraft when three or four would do.

Sir Peter funded the expansion of his fleet and its non-core businesses with debt, which left Ansett's balance sheet fundamentally flawed during the challenges of the 1990s.

HOW DID ANSETT SLIP FROM A POSITION OF MARKET DOMINANCE?

Ansett lost its licence to print money when the Federal Government deregulated the airline industry and dismantled the longstanding two-airline policy in 1990.

Bryan Gray's cut-price airline Compass was the first to mount a challenge to the incumbents, Ansett and the government-owned Australian Airlines, which would later be folded into Qantas.

The crippling costs of defending its position against the two Compass challenges were compounded by the pilots' dispute, when its union pilots quit en masse and effectively knocked Ansett out of the skies for several months. Ansett's debts mounted and the airline came close to bankruptcy. Its market share, once at 60 per cent, began to decline until Ansett and Qantas had virtually reversed their respective positions.

WHAT PART DID THE GROUNDING OF THE ANSETT 767 FLEET PLAY?

Early this year Ansett suffered systemic maintenance problems that disrupted its Easter peak holiday traffic. Soon afterwards, cracks were discovered in the engine mountings of its 767 aircraft and the Civil Aviation Safety Authority grounded the Ansett 767 fleet until each aircraft underwent a thorough safety check.

The problems were more effect than cause. Ansett's fleet is now the second oldest among 50 world-class airlines, the result of nearly a decade of financial difficulties and two former owners more interested in selling the airline than running it.

The grounding highlighted Air New Zealand's urgent need to update the Ansett fleet.

HOW DID AIR NEW ZEALAND GET INTO THIS?

Air New Zealand first declared its interest in Ansett Australia in November, 1995. It had withstood a challenge in its own skies from Ansett New Zealand and saw in Ansett Australia an opportunity to grow its business beyond its boundaries. It took nearly a year to negotiate the $475million purchase of TNT's share of Ansett Australia. This included the transfer of its domestic competitor, Ansett New Zealand, to News Limited. It took another four years to acquire the remaining 50 per cent of Ansett from News Limited for $580million in April last year.

By this time, Ansett's operating losses were increasing and would soon have a heavy impact on Air New Zealand's balance sheet. Last year Air New Zealand announced a $454.5 million loss but it refused to quantify Ansett's contribution. Air New Zealand was still optimistic the merger would create savings and enhanced revenues that would return it to profit. However, both airlines were suffering the impact of the simultaneous collapse in Australian exchange rates and high international fuel prices.

AND SINGAPORE AIRLINES?

Singapore Airlines, a Star Alliance partner, was also looking for opportunities to expand its operations in the Pacific region. It acquired 8.3 per cent of Air New Zealand for $116 million in April last year, just as Air New Zealand was completing its purchase of Ansett.

The New Zealand Government gave Singapore Airlines approval to acquire up to 25 per cent of Air New Zealand, enabling it to negotiate a $238 million purchase from Brierley Investments in August last year.

WHAT HAS BROUGHT THE PRESENT CRISIS TO A HEAD?

When Gary Toomey took over as chief executive of Air New Zealand at the start of the year, the airline was close to chaos. Its operating losses were growing and soon the Ansett maintenance crisis would drain the public's confidence. Toomey said he would need to spend $5 billion to renew the Ansett fleet.

Singapore Airlines was willing to help out if it could raise its stake in Air New Zealand to 49 per cent. Qantas also offered a helping hand. It would buy 25 per cent of Air New Zealand if Singapore Airlines would take over Ansett and quit its shareholding in the New Zealand carrier.

The New Zealand Government was emphatic that it did not want any part of the Qantas proposal but it has been less definite about the Singapore offer. It has procrastinated long and hard. It recognises the urgency of a cash injection for Air New Zealand but it is still trying to decide whether to let Singapore Airlines have its 49 per cent or something less. Most observers have speculated it will settle for 35 per cent.

[lackov]

The clock ticks, and still nothing from the NZ government................What are these guys on????

[Kaptin M]

From a non-pilot's, John Citizen's point of view:
"I really don't give a damn what happens to Whatsett..........as long as it doesn't affect me, and me family's travel plans!"

[Pferdsheise]

Crafty players at the crossroads

07.09.2001 By FRAN O'SULLIVAN
If Singapore Airlines chief executive "CK" Cheong is not using every opportunity to dump the share price and screw a better deal for SIA to bail out Air New Zealand, he has lost his touch as a master strategist.

"CK", as Dr Cheong is known in boardrooms throughout Singapore and Australasia, has played a masterly game since Air New Zealand's financial situation worsened.

The bad news is pouring out by the bucket load as aviation analysts question the survival of Ansett Australia, Air New Zealand's loss-making Australian subsidiary.

Air New Zealand has tried to keep a lid on Ansett's problems.

But with the national flag carrier "in play", plenty of players have an interest in seeing Air New Zealand's share price fall through the floor - particularly if they can wrest control of the airline at a cheap price, or put the financial skids under a competitor.

Sir Richard Branson's opportunistic and very public spurning of an Air New Zealand offer to acquire Virgin Blue (Australia) was classically timed.

So, too, were the subsequent leaks revealing that Ansett was losing $A1 million a day.

Sir Richard must be laughing as Governments on both sides of the Tasman scurry about trying to avert the failure of Australia's second-largest airline.

If Ansett falls over, Virgin Blue will reach a fast maturity.

Today, Air New Zealand's board will once again try to stabilise the situation with yet another public statement.

But shareholders will not be convinced until the airline's major shareholders, Singapore Airlines and Brierley Investments, announce they will commit to the financial recapitalisation.

With Air New Zealand's share price tumbling well below the $1 mark, there is no way Dr Cheong's board will want to approve a planned bailout at $1.31 a share.

Even a powerful chief executive must answer to a board of directors.

In the case of Dr Cheong, his board is dominated by representatives from the Singapore Government.

Players closely aligned to the Singaporean Government interests also dominate Brierley Investments, whose board met in Singapore on Monday to work up its game plan.

If Singapore Airlines finds dealing with the New Zealand Government too onerous, then Qantas is still waiting in the wings with its own offer for Air New Zealand.

Either way, Singapore Inc - the ruling club that controls both of Air New Zealand's major shareholders - is now poised to control the Australasian aviation market.

But now the price will be much cheaper than it was at this time last week. "CK" will have done his work.
www.nzherald.co.nz/aviation

[Evacu8]

Sorry, the fact is if AN closes, neither QF or VB (or both combined) could possibly pick up the extra pax and freight load... neither of us have the capacity.

If AN does close, it will reopen by whoever picks up the pieces very quickly - the government will make sure of it... all bets off, they will allow anyone to buy it for any price.... it remains to be seen what conditions the employees will be on. I think most employees will take anything rather than unemployment.

Which in turn will impact on the rest of us... unfortunately, I see this as becoming the new benchmark in wages for the Australian aviation industry wages.... hope I'm wrong.

[Wirraway]

Profit wings clipped, but Qantas is flying strongly

By Mark Todd

Although its domestic earnings have been halved, Qantas Airways may yet emerge from the wreckage of an intensely competitive domestic aviation market in an even stronger position.

"It is the complete flip side of Ansett," said one fund manager.

Internally, Qantas's falling profits have forced the airline to make big cuts to its cost base while, externally, its main competitor Ansett has ceded millions of dollars worth of market share, and is now near collapse.

The other wild card, Virgin Blue, has started managing yields, which means that price competition has eased.

Qantas's domestic operations in 2000-01 fell 53 per cent to $127.4 million. But the dogfight, which has already claimed Impulse and may yet bring down Ansett, has entrenched Qantas as the country's dominant airline with an even firmer grip on about 54 per cent of the market.

"Undoubtedly, Qantas is a stronger carrier for it," said Mr Peter Harbison, managing director of the Centre for Asia Pacific Aviation. "They've come through all the competition still making profits and have now got a good, low-cost operation in place, especially since Impulse fell into its lap."

Earlier this year Qantas announced it would cut almost 1,500 jobs, or 5 per cent of its workforce. The move would cost about $50 million in payouts but save the airline about $100 million a year.

Some financial market analysts suggested yesterday it was possible for the airline to shed up to 2,000 staff, generating an additional $30 million to $35 million in savings. "There is a lot of scope for more cost-cutting," said one analyst at a large foreign bank.

Qantas's public affairs manager, Mr Michael Sharp, declined to comment on the possibility of job reductions. The airline had identified savings in other areas, such as discretionary expenditure and sponsorships, he said. Qantas is no longer the naming right sponsor for the Australian Formula One Grand Prix.

The airline's net profit fell almost 20 per cent to $415 million in the year to June 30, but analysts are starting to believe this could be the final year of pain. The average estimate is for net profit of $301.6 million in 2001/02, but from then on profit growth resumes.

With Impulse gone, Ansett in trouble, and Virgin Blue behaving rationally, there isn't anything like the pressure on yields now compared to this time a year ago. "It is highly unlikely Qantas will report a domestic result anywhere near as bad as last year," said one analyst.

Meanwhile Qantas got a taste of things to come when 150 catering staff in Western Australia walked off the job at midnight on Thursday, and ground staff around the country stopped work for three hours yesterday.

Up to 13,000 members of the the Australian Services Union are planning to launch a 24-hour strike and a series of rolling stoppages next Wednesday, while hundreds of National Workers Union members plan to go out next week, though they have not yet decided when.

Qantas said yesterday that negotiations with the unions over a new enterprise bargaining agreement were under way.

[Wirraway]

London:

Richard Branson loves nothing more than a good spat and the crisis facing Australia's airline industry has all the hallmarks of another Branson blockbuster.

Attention might be firmly focused on the collapse of Air New Zealand and its struggling Ansett airline but to discard Branson and his Virgin Blue airline as a two-bit, low cost business with very little clout would be to underestimate the power of the Virgin brand and Branson's enthusiasm for taking on the big boys, whether they be corporations or governments.

While the problems for Air New Zealand and Ansett have been deepening for several months, the trigger for the latest and most serious development in the airline's capital crisis was the decision earlier this week by the British knight to turn down Air New Zealand's offer of $250 million for his one-year-old airline.

"I've been offered a quarter of a billion dollars to pack my bags and go home and I've turned it down," Branson said. "But it's not the price that's bothering me, it's more to do with the fact that Virgin Blue should stay independent and provide the competition. The Government should also want us to stay independent and they should want to see us competing.

"That's the only thing that makes me wonder whether or not I should accept the money - does the Government care? If they have no real desire to improve the level of competition and therefore reduce prices here, maybe I should sell up, go home and move on to other projects."

At this stage, that looks increasingly unlikely. Speculation has already circulated that the original white knight, Singapore Airlines, has offered Virgin Blue the 25 per cent stake in Air New Zealand while it takes charge of Ansett. Singapore owns 49 per cent of Branson's Virgin Atlantic, so relations between the two parties are already warm.

No-one from Virgin Blue could comment on where Branson stands on the latest events, but one thing is for sure he'll fight tooth and nail to stop the Government from stepping in.

"What we're trying to urge the Federal Government to do is to bring in the same sort of anti-competitive behaviour legislation that exists in America and exists in Europe," Branson said earlier this week. "In America, the directors of Qantas would have been put into prison for some of things they've got up to here.

"It's the fault of most governments around the world that they love to protect the big companies that they feel comfortable with. But by protecting Qantas and Ansett, consumers for the last 20 years have had to pay literally hundred of millions of dollars more that they would have done if they hadn't been allowed to drive Impulse and Compass to the wall.

"The negative effect isn't just on the travelling public. It also has an enormous negative on tourism. Australia has been an expensive place to get around, and it's had an enormously negative effect on all the other businesses in the country.

"The Government has let us come in and compete, but having allowed us to come they should ensure the blatant anti-competitive practices are stamped out. And that's all we're asking."

Branson uses the Adelaide incident to illustrate his point. "The very day we announced we're coming to Adelaide, Qantas announced it was putting on a whole lot more capacity to Adelaide - almost exactly at the same time as we were flying and they slashed their fares by $400. They were blatantly trying to drive us off the route before we had even got started.

"Now, if we had been any other business apart from Virgin we couldn't sustain that. The only reason we could was because we've got a strong brand, high load factors and because we're willing to hang on in there."

That's an important point. Branson is passionate in his desire for Virgin Blue to succeed and for airfares to be reduced as competition increases. That passion was most spectacularly displayed in the early 1990s when he took on British Airways.


Branson didn't like the tactics deployed by one of the world's biggest airlines after he launched his low-cost rival, and he decided to take BA to court. In 1993, he emerged triumphant, with an out of court settlement in what the British press had dubbed the BA "Dirty Tricks" campaign.

In the latest five-day whirlwind tour, Branson partied in Brisbane, rode tanks in Sydney, talked in Melbourne about adding the Virgin name to marijuana (if it were legalised) and lobbied politicians.

While visiting Sydney, the billionaire, who owns a tropical island and likes to fly hot air balloons around the world, didn't stay at the Park Hyatt or the Double Bay Stamford. He stayed at the Holiday Inn in King's Cross, where his staff stay over.

Branson likes to concentrate on pushing the Virgin brand around the world - hence the numerous and varied publicity stunts - and eventually Virgin Blue and Virgin Mobile will be followed by Virgin Megastore and the personal finance arm, Virgin Direct.

"If we had an ambition in life it would be to create the most respected brand in the world, not necessarily the biggest," he says.

"Virgin is already one of the top 20 best known brands, but interestingly the other 19 are all specialists. Coca-Cola specialises in soft drinks, Microsoft specialises in computers, Nike in shoes. Then you've got Virgin, which is perhaps more a way of life."


But why Australia? With a population of less than 20 million, some have argued that the local market can't offer anything like the same commercial viability of Britain, Europe, India, Hong Kong and the US. But Branson doesn't see it like that.

"There isn't a company quite like Virgin down here in the sectors that we were moving into and when we've got the retail arm and the personal finance arm up and running as well as the airline and the mobile phone operations, we'll hopefully have quite a big, profitable business.

"And it's great fun. I always enjoy my visits here. We always have great parties and the people are delightful, so if you're going to do business somewhere you might as well do it in a country where it's fun to do business."

Branson parties at his home in London's Holland Park and out in the country are notorious. He sends Virgin Atlantic's glamorous airline stewards to steal clients from rival parties and he owns one of London's hippest clubs, the Kensington Roof Gardens. Many of the stunts annoy his rivals and are ridiculed for their tackiness. But they never stop making headlines and that's what Branson wants.

Branson's interference in the Tampa illegal immigrant crisis, with the offer to fly the asylum seekers free of charge to New Zealand illustrates the entrepreneur's knack of combining good deeds with yet more publicity.

His offer may have been sincere, but he was also playing to the world's cameras.

After being asked by one reporter why he was making such an offer when the Australian public had made it perfectly clear they didn't want the refugees assisted in any way, Branson was blunt. "It may look good ... to the electorate here, but I can assure it doesn't look good in the rest of the world."

By the end of last week's trip, most were no doubt sick of the sight of the British knight running around the country with the media reporting on his every publicity related caper. But if they think that's the last they've seen of him for some time, then they're sadly mistaken.

Branson has big plans for Australia.

[Wirraway]

NZ "Dominion" Sat:

Shares plummet, but one investor backs Air NZ
08 September 2001

Air New Zealand's share price was expected to fall further, despite having already lost up to 30 per cent this week, investors and analysts said on Friday.
The A shares, which can only be owned by New Zealand residents, have fallen from 95 cents a week ago to close at 70 cents on Friday, while the B shares have gone from $1.15 to 81 cents.

Air New Zealand shareholders have seen $223 million wiped off the value of their company in just a week. The combined A and B shares were worth $793 million at the close last Friday - on Friday they were worth $570 million.

Despite the blood on the floor, one institutional investor said the situation could be salvaged and Air New Zealand was a good business.

AMP Henderson's Chris Wozniak said: "The environment for the company, overall, continues to be highly uncertain but, from an investor's point of view, we think Air New Zealand itself is a pretty good business."

Investors should probably not tar Air New Zealand with Ansett Australia's problems surrounding its fleet, he said.

The problems within the group were due to the leasing of aircraft for Ansett, and were not problems that were prevalent across both businesses or across a wide range of issues, Mr Wozniak said.

The task of turning Ansett Australia around would not be difficult once the Air New Zealand board, the Government and major shareholders Singapore Airlines and Brierley Investments reached agreement on a rescue plan.

"The issue is clearly identified and can be resolved."

Mr Wozniak said valuation measures were not relevant for the stock in the current environment. The company could not survive on its existing capital structure, so making any valuation would have to be done after the capital injection.

"Until we know the terms of the capital injection, it is hard to think about it in terms of its value," he said.

The share price would continue to be under pressure till there was a firm announcement on the company's future, Mr Wozniak said.

While it would have been preferable that the issue had been resolved earlier, it had obviously been difficult to get full information about what was happening at Ansett.

If that picture was changing from day to day, then the company would have to rethink what was required to turn the situation around, he said.

AMP had sold down its holding in Air New Zealand earlier this year.

However, one industry analyst said the turnaround of Ansett would not happen overnight.

"The airline business is all about confidence. It is also about maintaining schedules," the analyst said.

Ansett was losing market share, its planes were old and required more time on the ground and the company would have to join a waiting list for new planes, the analyst said.

It was possible Ansett would be able to jump the queue to buy new planes given the down in the aviation market.

[Wirraway]

Sat "NZ Herald:

Big loss digs deeper hole for Air NZ

08.09.2001 By FRAN O'SULLIVAN AND DANIEL RIORDAN

Pressure is mounting on the Australian and New Zealand Governments to bail out Air New Zealand amid fears that its subsidiary, Ansett Australia, is days from a collapse that could take its parent with it.

The Air New Zealand board finally admitted yesterday that Ansett is losing $1.5 million a day - close to $550 million a year - after a savage run on the share price caused the Stock Exchange to demand answers from the airline.

The Air New Zealand statement, issued at 5.50 pm after another day's haemorrhaging on the Stock Exchange, confirmed that Singapore Airlines had withdrawn its rescue offer to provide extra capital at $1.31 a share.

The A shares closed last night at 70c and the B shares at 81c.

Singapore Airlines held its own board meeting yesterday to discuss the Air New Zealand problems.

It has confirmed to Air New Zealand that it is still interested in supporting the rescue package, if it can be put together on a sound basis.

The mounting problems at Air New Zealand caused rating agency Standard & Poor's to cut the company's credit rating from BB+ to B+.

Prime Minister Helen Clark said last night that the Government was "incredibly reluctant" to have New Zealand taxpayers carry the can, but she could not rule anything out.

Finance Minister Michael Cullen and his Australian counterpart, Peter Costello, will today discuss options for Ansett - including a taxpayer-funded rescue package - when they meet at the Apec Finance Ministers Conference in Shanghai.

Australian Prime Minister John Howard is not keen for his Government to invest in private companies but he wants Ansett to survive.

Air New Zealand's board, which has been holding crisis meetings this week after Sir Richard Branson's Virgin Blue pulled the plug on a rescue package, hopes to have a proposal ready by Monday that will enable the Government to decide the airline's future.

But a decision may not be ready before the airline delivers its June-year results on Thursday, the day after Dr Cullen returns from China.

Ansett needs more than $1 billion to meet its immediate capital needs.

Directors yesterday confirmed that Ansett was losing $A1.3 million ($1.5 million) a day in earnings before interest and tax.

Singapore Airlines, aided by Sir Richard Branson, has been taking a tough line to negotiate a better price for its increased stake in Air New Zealand.

But it is dismayed at the worsening state of Ansett's finances since negotiations began, and at the time the Government has taken to decide whether Singapore can lift its shareholding above 25 per cent.

A spokesman for Australian Transport Minister John Anderson said two decisions needed to be made before the Australian Government became involved.

"The Air New Zealand board needs to work out exactly what it wants, and the New Zealand Government then needs to make a decision on that."

Sir Richard Branson continued to stir the pot, promoting his own deal, under which Singapore would sell its stake in Air New Zealand to Virgin Blue, Singapore would buy Ansett from Air New Zealand, and Air New Zealand would use the proceeds to buy 50 per cent of Virgin Blue.

Analysts rated the deal's chances of success as slim to zero, particularly as Singapore says it has no desire to own Ansett separate from Air New Zealand.
www.nzherald.co.nz/aviation

[lame]

Wirraway,

Thank you for all the posts.

Have you been up all night????????

Best regards,

"lame"

[SOPS]

And so the end is near, and now we face the final curtain.