Cushing defends Ansett purchase

Friday 25th May 2001

Crisis, what crisis?

Sir Selwyn Cushing thought he was off to Fiji for a quiet holiday. Boy, was he wrong. After a local reporter printed details of his hotel, one of Brierley Investments' suites at the Denerau Villas next to the Denerau Sheraton, he was besieged. "I had to move. I left my belongings there for appearances and got out."

Sir Selwyn looked faint when asked how many phone calls he had received after the New Zealand Herald published a story saying Air New Zealand was preparing to ask the government for a cash injection of $500 to $700 million.

Sir Selwyn flatly denies such a plan was ever considered.

Sir Selwyn Cushing

By Nicholas Bryant

Besieged Air New Zealand chairman Sir Selwyn Cushing yesterday hit back at his critics, saying the national carrier is not cash-strapped and that it had no option but to buy Ansett Australia.

He also denied reports Air New Zealand had considered going to the government for between $500 and $700 million. "We are not broke by any means ... there was no application, we weren't even preparing a case [to take to the government]," he said.

Despite what he described as the most stressful six weeks of his long business career, Sir Selwyn maintained Air New Zealand would grow and prosper thanks to Ansett Australia. Critical to his argument was the five-year growth profile of Ansett's domestic and international passengers carried, as well as Air New Zealand's.

Air New Zealand's combined domestic and international passengers carried for the 2000 year was 7.8 million, up from 6.3 million people in 1995.

But Ansett, with 43% domestic market share in Australia carried 14 million passengers last year, up from 11.8 million in 1995.

"The mechanics of Ansett are fixable, but the market is what we serve. The compelling logic is in the 33% of New Zealand's critical international inbound traffic coming from Australia and 53% of its outbound traffic going to Australia," Sir Selwyn said. The big drivers behind buying Ansett were the inevitable loss of feeder traffic from Australia into New Zealand, Australian domestic passengers into Air New Zealand's Sydney, Los Angeles and London routes and hubbing for flights up into Asia.

"Fuel blowouts and the need to upgrade rapidly thanks to the Casa grounding are minuscule compared to the tap-in advantages of owning Ansett," Sir Selwyn said.

He reiterated that $1 billion would be in Air New Zealand's coffers by the end of June, the money coming from cashflow, the sale of its share of computer booking company Tias, its new Pratt & Whitney joint venture and the sale and leaseback of 10 Boeing 767 aircraft to Gecas, General Electric's aircraft leasing arm.

Meanwhile, Qantas Airways will begin its domestic service expansion next week with the arrival of the second of four Boeing 737s and a move to terminals previously occupied by its collapsed franchisee Qantas New Zealand. The Australian carrier has been operating one 737 on four daily flights between Auckland, Wellington and sChristchurch since Qantas New Zealand was placed in receivership a month ago.

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