By Nick Stride and Rob Hosking
Friday 14th September 2001 |
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MICHAEL CULLEN: Government had been a punching bag |
The major uncertainty now is the fate of Australian subsidiary Ansett.
At press time Air New Zealand had not identified the second "interested party" which might step forward to buy Ansett.
Ansett staff and management are also working on a plan to buy some of the assets from Air New Zealand and keep the carrier flying.
Any sale would see the local carrier recoup some of its $1.4 billion Ansett investment. But if no buyer emerges and Ansett is liquidated Air New Zealand and its backers face possible further losses.
"There will be some level of legal uncertainty around Ansett, and some of the costs may flow back to Air New Zealand," Finance Minister Michael Cullen told a Beehive press conference yesterday.
Those costs were "potentially certainly not insignificant," he said but he would not comment further.
"The future of Ansett itself is now a matter for the Australian government."
The government had been a "punching bag" throughout the Air New Zealand imbroglio, Dr Cullen said. Throughout the affair ministers had always expected to raise the foreign ownership cap - the question was only about how much.
One option was a 35% cap with a capital injection from the government: the other was a lift of the cap to 49% and no capital input.
The failed Virgin Blue buyin was crucial to keeping the Australian investment, and once Virgin owner Richard Branson had indicated he was not interested then there was no other option but selling Ansett.
The conditional deal is still subject to due diligence, which will take place over the coming month.
Dr Cullen said that at this point there was no "plan B" if the due diligence forced the New Zealand government to rethink its position.
Tuesday's terrorist attacks in the US have also added to the risks Air New Zealand shareholders face.
The attacks have seen oil, and therefore fuel, prices jump and a worldwide downturn in airline bookings.
The airline yesterday announced a $1.42 billion June-year loss. Operating losses were $173 million while the Ansett writedown blew a $1.3 billion hole in the balance sheet.
As a result shareholders' funds, which last year stood at $1.8 billion, shrank to $518 million.
The rescue plan will see Singapore Airlines and Brierley Investments, which own 25% and 30% of the carrier respectively, pump in $150 million each in fresh equity.
The government has authorised the dismantling of the A and B share structure and is providing a $550 million stand-by credit facility at commercial rates.
It has also authorised a lift in Singapore Airlines' shareholding to 35%.
Ansett was placed in voluntary administration on Wednesday after rival carrier Qantas declined to buy it and the Australian government rejected an Air New Zealand request for financial aid to keep it flying.
Air New Zealand had proposed to set up "Ansett 2," a discount airline that would have used part of Ansett's fleet, facilities and network.
Some 16,000 Ansett jobs, and perhaps 45,000 in related industries, are at risk, creating a major headache for an Australian government facing a general election in two months.
Under Australian law voluntary administration is available to give companies headed for receivership a breathing space in which to seek a way forward. But such companies may remain in administration for a maximum of 28 days.
Ansett staff working on a rescue plan have hired US investment bank Keilin & Co, which advised on the 1994 staff buyout of United Airlines.
The New Zealand government has taken heavy flak from media and opposition parties for the way it has handled the Air New Zealand crisis.
National Party finance spokesman Bill English on Wednesday said the government's "continued dithering" had contributed to the size of the financial loss.
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