Qantas turns its back on Ansett

By Phil Boeyen, ShareChat Business News Editor

Wednesday 12th September 2001

Air New Zealand (NZSE: AIRVA) wants to turn Ansett into a budget airline and pit it against Virgin Blue after Qantas decided not to proceed with the purchase of the troubled airline.

The company is now appealing to the Australian government to help keep Ansett flying in light of the Qantas decision, and has delivered a letter to Acting Prime Minister of Australia, John Anderson, requesting that the government underwrite Ansett's operations for an agreed period while a restructuring plan is worked out.

Under the proposal, Air New Zealand says it would liquidate the existing Ansett airline companies and form a new airline - Ansett 2.

It says this would initially seek to be a value-based airline with a similar cost base to rival Virgin Blue.

However the budget airline would be able to call on Ansett's lucrative airport landing rights and air routes, providing a much broader network coverage, nationally and regionally, across Australia.

"I have respectfully suggested that this provides a real opportunity for the Australian government to assume a leadership role not only in saving many jobs, but also to provide the foundation for a reinvigorated competitive aviation market in Australia, based on sound principles," says Air NZ acting chairman, Jim Farmer.

Air NZ, which confirmed last week that Ansett is losing A$1.3 million a day, says it wants an urgent response to the proposal.

The latest turn of events shows a determination by the New Zealand carrier to realise some value from its Ansett investment even though it has not been able to convince Virgin Blue, Singapore Airlines or Qantas to stump up with any cash.

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