Forum Archive Index - September 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Hans, Ben and All on the Thread and Other Readers,
 
I read Frank Fernandez's Stocktake article and Ben's piece both 
blasting the New Zealand government, re the Air New Zealand affair.  
I have to say, I don't agree with their views.

The assumption behind all of this seems to be that if Singapore had 
been allowed to lift its stake to 49% of Ansett six weeks ago, then 
all would be well now.

There are three presumptions in that position.   The first is 
that the $500m that Singapore Airlines intended to inject into Air 
New Zealand would be enough.  The second (secret) presumption (which 
came out after the fact) was that Virgin Blue was up for sale.  The 
third presumption was that there was a firm offer from Singapore 
Airlines on the table.   All of these presumptions were false.

Air New Zealand is on record as saying they needed access to 
$NZ4billion dollars to rejuvenate an Ansett fleet that was no longer 
making losses.  The package put up by Singapore Airlines came nowhere 
near this.

Something that I have become aware of more recently was that Virgin 
approached Singapore Airlines to take a stake in Virgin Blue to get 
this airline off the ground.  This deal was kaiboshed 
when Singapore Airlines invested in Air New Zealand instead.   
Branson was clearly annoyed at this turn of events, and was never 
going to be an easy player to bring back into line down under.

The third point was the letter of intent to purchase Air New 
Zealand shares at $1.31 from Singapore Airlines.  This was always 
going to be subject to due diligence, and was in no way a firm offer. 
Once Singapore airlines got hold of the true picture they would 
have found what the NZ government found:   A boardroom table with 
nothing but bare bums sitting around it!  The emperor had no clothes. 
 There was no credible business plan from the board to stop the red 
ink haemmorhaging.  Singapore Airlines would have pulled the plug on 
their $1.31 plan at this point.

There is nothing the New Zealand government could have done to stop 
any of this.  The only delay from the government was because the Air 
New Zealand board could not come up with a credible business plan.   
The NZ government hasn't done anything wrong as I see it. SNOOPY



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