Lew And Fox What Is Their Game? (Business Sunday)
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Sorry I missed the said article in the early. .hours this morning.
Wirraway
Make no mistake, it's Virgin urgin' mergin'. .By Robert Gottliebsen. .February 19, 2002
LINDSAY Fox and Solomon Lew's most valuable asset will be the 2.7 million people in the Ansett customer base, which is one of the best in Australia.
. . Advertisement . . . . . .It's that customer base, and the new work practices to which the unions agreed, that made the two men believe that, if they could put the essential rescue elements in place and offer the services the market requires, they had a great opportunity.
At the weekend, Fox and Lew announced they would honour Golden Wing memberships and extend them by six months so nobody was out of pocket as a result of the Ansett hibernation.
In a few days they will announce a proposal to convert the 70 million global rewards points earned under the old Ansett arrangement into the new one. The Ansett customer base is captured in the Golden Wing membership and global reward points schemes.
As a result, although Ansett will undertake a major advertising campaign – it will doubtless link the new Ansett to the entrepreneurship of the late Reg Ansett – it will be able to target those on the customer base with mail and email in a way no other start-up could.
The attraction of the customer base was one of the reasons Fox and Lew pressed on with the Ansett rescue when they were put under incredible pressure by the difficulty of the task – multiplied by the moves of rival Qantas and their enemies in Canberra.
Even if Lew and Fox had wanted to pull back, to do so when the road got bumpy would have harmed their reputations.
The new Ansett should have a cost base that will enable it to break even when it achieves about 25 per cent of the local market, depending on fare levels.
More than half that target will come from Star Alliance partners led by Singapore Airlines. The balance will come from the existing customer base. Clearly there were a lot more hurdles in the way than Fox or Lew ever conceived and there are still more to come, although the worst seems to be over.
To exploit those advantages, Fox and Lew need to provide the services their customer base expects.
Factored into the Fox and Lew estimate was a vigorous price war with Virgin and Qantas as they "welcomed" the rescued airline.
Virgin indicated it would be particularly vicious by offering 20c airfares to Ansett creditors wanting to attend the meeting last month.
But the discount offer may have back-fired because when any organisation offers pricing of that sort it's actually issuing an invitation for merger talks.
Fox and Lew have always believed there was room for Virgin operating separately, but there are clearly economies in running the two airlines in tandem – particularly if Virgin uses Ansett terminals and the two airlines use the same operating system.
It wouldn't make sense to run airlines in tandem without a merger or an equity link. Fox and Lew believe they are in the long-term winning position and won't invite Virgin into the tent unless the terms are right.
Of course, the profitability of the rescue will depend on whether Fox and Lew can convince large organisations to switch part of their business to Ansett.
Qantas will fight hard to keep its current share of the business market. Frequency between major centres will be a Qantas advantage and it will take time for Fox and Lew to win back the old business customers.
In the long term, Qantas will need to lower its cost structure to match Ansett's, particularly if Ansett can offer the equivalent service.
The share market understands the threat Fox and Lew pose to Qantas. When the press reports were indicating the Fox and Lew consortium was having difficulty, Qantas shares began rising. Had the rescue failed, Qantas would have the business market to itself and would have more than 80 per cent of the total market.
When it became clear the odds were favouring a relaunch of a new Ansett with a lower cost structure than the old Ansett, Qantas's share price fell back.
Qantas will have to lower its cost structures to go close to matching, which may cause industrial problems. Qantas pilots and air crew have a totally different reward and conditions structure to those at Ansett. The winners in the re-launch of Ansett are airline travellers.
Robert Gottliebsen writes each day for The Australian and broadcasts nightly on the ABC Asia-Pacific TV network . .E-mail: [email protected]. .Website: <a href="http://www.theaustralian.com.au/business" target="_blank">www.theaustralian.com.au/business</a> and click on message board.
Wirraway
Make no mistake, it's Virgin urgin' mergin'. .By Robert Gottliebsen. .February 19, 2002
LINDSAY Fox and Solomon Lew's most valuable asset will be the 2.7 million people in the Ansett customer base, which is one of the best in Australia.
. . Advertisement . . . . . .It's that customer base, and the new work practices to which the unions agreed, that made the two men believe that, if they could put the essential rescue elements in place and offer the services the market requires, they had a great opportunity.
At the weekend, Fox and Lew announced they would honour Golden Wing memberships and extend them by six months so nobody was out of pocket as a result of the Ansett hibernation.
In a few days they will announce a proposal to convert the 70 million global rewards points earned under the old Ansett arrangement into the new one. The Ansett customer base is captured in the Golden Wing membership and global reward points schemes.
As a result, although Ansett will undertake a major advertising campaign – it will doubtless link the new Ansett to the entrepreneurship of the late Reg Ansett – it will be able to target those on the customer base with mail and email in a way no other start-up could.
The attraction of the customer base was one of the reasons Fox and Lew pressed on with the Ansett rescue when they were put under incredible pressure by the difficulty of the task – multiplied by the moves of rival Qantas and their enemies in Canberra.
Even if Lew and Fox had wanted to pull back, to do so when the road got bumpy would have harmed their reputations.
The new Ansett should have a cost base that will enable it to break even when it achieves about 25 per cent of the local market, depending on fare levels.
More than half that target will come from Star Alliance partners led by Singapore Airlines. The balance will come from the existing customer base. Clearly there were a lot more hurdles in the way than Fox or Lew ever conceived and there are still more to come, although the worst seems to be over.
To exploit those advantages, Fox and Lew need to provide the services their customer base expects.
Factored into the Fox and Lew estimate was a vigorous price war with Virgin and Qantas as they "welcomed" the rescued airline.
Virgin indicated it would be particularly vicious by offering 20c airfares to Ansett creditors wanting to attend the meeting last month.
But the discount offer may have back-fired because when any organisation offers pricing of that sort it's actually issuing an invitation for merger talks.
Fox and Lew have always believed there was room for Virgin operating separately, but there are clearly economies in running the two airlines in tandem – particularly if Virgin uses Ansett terminals and the two airlines use the same operating system.
It wouldn't make sense to run airlines in tandem without a merger or an equity link. Fox and Lew believe they are in the long-term winning position and won't invite Virgin into the tent unless the terms are right.
Of course, the profitability of the rescue will depend on whether Fox and Lew can convince large organisations to switch part of their business to Ansett.
Qantas will fight hard to keep its current share of the business market. Frequency between major centres will be a Qantas advantage and it will take time for Fox and Lew to win back the old business customers.
In the long term, Qantas will need to lower its cost structure to match Ansett's, particularly if Ansett can offer the equivalent service.
The share market understands the threat Fox and Lew pose to Qantas. When the press reports were indicating the Fox and Lew consortium was having difficulty, Qantas shares began rising. Had the rescue failed, Qantas would have the business market to itself and would have more than 80 per cent of the total market.
When it became clear the odds were favouring a relaunch of a new Ansett with a lower cost structure than the old Ansett, Qantas's share price fell back.
Qantas will have to lower its cost structures to go close to matching, which may cause industrial problems. Qantas pilots and air crew have a totally different reward and conditions structure to those at Ansett. The winners in the re-launch of Ansett are airline travellers.
Robert Gottliebsen writes each day for The Australian and broadcasts nightly on the ABC Asia-Pacific TV network . .E-mail: [email protected]. .Website: <a href="http://www.theaustralian.com.au/business" target="_blank">www.theaustralian.com.au/business</a> and click on message board.
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Tues News.com
Ansett sale contract unfinished
February 19, 2002
A FEDERAL Court application to approve the Ansett sale contract was adjourned after administrators revealed details of the sale were not yet complete.
. .But administrator Mark Korda said he was confident the February 28 deadline for the sale of the failed airline to the Tesna consortium headed by Lindsay Fox and Solomon Lew would be met.
The deadline was a self-imposed one as was the application seeking Federal Court approval of the deal, Mr Korda told reporters outside the court today.
He said the administration was not concerned by today's adjournment.
"This is complex ... but we're into the home stretch," he said.
Earlier today, Canberra Airport lawyers told Federal Court Judge Susan Kenny it had terminated the Ansett lease.
Counsel for Canberra Airport, Robert Strong, said the airport would be requiring Ansett administrators to remove carpets, which had rotted in a flood after Ansett closed its terminals and locked its doors last month.
Mr Strong said administrators would be "in for a fight" if they wanted the terminal handed back to them.
Parties will return to the court for a hearing over the lease on March 14.
Mr Korda told reporters outside the court the Canberra terminal was not required as part of the Ansett sale.
Ansett sale contract unfinished
February 19, 2002
A FEDERAL Court application to approve the Ansett sale contract was adjourned after administrators revealed details of the sale were not yet complete.
. .But administrator Mark Korda said he was confident the February 28 deadline for the sale of the failed airline to the Tesna consortium headed by Lindsay Fox and Solomon Lew would be met.
The deadline was a self-imposed one as was the application seeking Federal Court approval of the deal, Mr Korda told reporters outside the court today.
He said the administration was not concerned by today's adjournment.
"This is complex ... but we're into the home stretch," he said.
Earlier today, Canberra Airport lawyers told Federal Court Judge Susan Kenny it had terminated the Ansett lease.
Counsel for Canberra Airport, Robert Strong, said the airport would be requiring Ansett administrators to remove carpets, which had rotted in a flood after Ansett closed its terminals and locked its doors last month.
Mr Strong said administrators would be "in for a fight" if they wanted the terminal handed back to them.
Parties will return to the court for a hearing over the lease on March 14.
Mr Korda told reporters outside the court the Canberra terminal was not required as part of the Ansett sale.
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Why would Korda say Canberra is not part of the sale, when TESNA had indicated earlier they will resume operations into Canberra.
Has the "master plan" changed? Could it be that Virgin will be the operator into Canberra?
Has the "master plan" changed? Could it be that Virgin will be the operator into Canberra?
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Up the page it was mentioned that Qantas had posted a half year profit of 200 million dollars. To satisfy my curiosity and to see if this needs to be taken into context, how much was attributable to domestic vs international ops? I recall reading somewhere that domestically QF was running rather thin but making up for it on the overseas runs. Anyone have the rundown?
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Like most finance journos RG likes to make the facts fit into his own scenarios. Those of us who watch the sharemarket closely know that the recent fall of Qantas shares (by the way, they are now very much on the climb again) also coincided with an announcement by Qantas that its half yearly profit estimate (June 2001 to Dec 2001) was to be lower than was previously thought due to all sorts of reasons too numerous to write about here. The market was far more likely to react to that than the news about Tesna. Qantas shares go up and down a hell of a lot but if they reacted to every article about any of their opposition the ASX would have to have a special mini stock exchange to deal with Qantas shares exclusively. Never believe a journo. All they want to do is sell a newspaper in order to keep their jobs.
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AAP Tues
Managers take Ansett to the industrial court
A break-away group of Ansett middle managers is taking the embattled airline to an industrial court to save thousands of dollars of entitlements from being lost in the Tesna takeover.
Eighteen managers and senior staff employed through Ansett's hospitality arm, Australian Concession Management (ACM), claim they are being illegally forced to stand down.
Gordon Henderson, representing the 18 workers, said unions and the ACTU had ensured all Ansett workers' rights and entitlements were protected.
But the group of middle managers employed through ACM had been "thrown on the scrap heap", he said outside an Australian Industrial Relations Commission (AIRC) hearing on the issue today.
The group had been told they must resign from Ansett before taking on positions with Tesna where they would be paid 75 per cent of their previous salary, Mr Henderson said.
The terms of their new positions were uncertain and there were fears Tesna may not accept responsibility for thousands of dollars in accumulated entitlements, he said.
"Who's to say Tesna won't collapse in two months, leaving them with nothing?" he said.
A notice of industrial dispute was put before the AIRC in Melbourne late this afternoon as Mr Henderson, on behalf of the 18 employees, requested a six-month interim award be put in place to protect the group while the Tesna sale deal went ahead.
. . İAAP 2002
Managers take Ansett to the industrial court
A break-away group of Ansett middle managers is taking the embattled airline to an industrial court to save thousands of dollars of entitlements from being lost in the Tesna takeover.
Eighteen managers and senior staff employed through Ansett's hospitality arm, Australian Concession Management (ACM), claim they are being illegally forced to stand down.
Gordon Henderson, representing the 18 workers, said unions and the ACTU had ensured all Ansett workers' rights and entitlements were protected.
But the group of middle managers employed through ACM had been "thrown on the scrap heap", he said outside an Australian Industrial Relations Commission (AIRC) hearing on the issue today.
The group had been told they must resign from Ansett before taking on positions with Tesna where they would be paid 75 per cent of their previous salary, Mr Henderson said.
The terms of their new positions were uncertain and there were fears Tesna may not accept responsibility for thousands of dollars in accumulated entitlements, he said.
"Who's to say Tesna won't collapse in two months, leaving them with nothing?" he said.
A notice of industrial dispute was put before the AIRC in Melbourne late this afternoon as Mr Henderson, on behalf of the 18 employees, requested a six-month interim award be put in place to protect the group while the Tesna sale deal went ahead.
. . İAAP 2002
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ABC News Net
Posted: Tue, 19 Feb 2002 20:58 AEDT
Frequent flyer plan greeted angrily by action group
The Global Rewards Action Group has reacted angrily to the new Ansett Frequent Flyer program unveiled today, and says a class action is now inevitable.
The Fox-Lew Consortium has described it as the most generous program ever to be put out in Australia.
However, it will involve members of the old scheme starting with a blank slate.
Instead, Tesna has created a bonus system, which they claim will allow many members to accrue more points in the first 12 months of operation, than they began with.
The action group's spokesman, Jon Caneva, says the scheme offers little in the way of compromise.
"We put forward a proposal last Friday to them which we thought was a win-win for everybody, but they have rejected that point blank at this point, and we think we need to go back to the administrators to have them revalue our points or we will be taking a class action," he said.
Posted: Tue, 19 Feb 2002 20:58 AEDT
Frequent flyer plan greeted angrily by action group
The Global Rewards Action Group has reacted angrily to the new Ansett Frequent Flyer program unveiled today, and says a class action is now inevitable.
The Fox-Lew Consortium has described it as the most generous program ever to be put out in Australia.
However, it will involve members of the old scheme starting with a blank slate.
Instead, Tesna has created a bonus system, which they claim will allow many members to accrue more points in the first 12 months of operation, than they began with.
The action group's spokesman, Jon Caneva, says the scheme offers little in the way of compromise.
"We put forward a proposal last Friday to them which we thought was a win-win for everybody, but they have rejected that point blank at this point, and we think we need to go back to the administrators to have them revalue our points or we will be taking a class action," he said.
