Cullen on defensive over Ansett troubles

By Phil Boeyen, ShareChat Business News Editor

Friday 14th September 2001

The government is moving swiftly to tackle any anti-New Zealand sentiment in the wake of the Ansett Airlines' collapse.

Finance Minister Michael Cullen has made a statement which refutes that any action - or alleged inaction - by the government has led to Ansett's demise.

Mr Cullen says on June 19 Singapore Airlines and Air New Zealand (NZSE: AIRVA) entered into a memorandum of understanding that would have seen a share placement followed by a rights issue, designed to raise about $850 million of new equity.

"As events have unfolded, it has become clear that that amount would not in the remotest sense have been sufficient to allow the group - with Ansett - to continue trading and to restructure along profitable lines."

Mr Cullen says it's important to remember, however, that the memorandum was not binding and the money would not have been put in without Singapore Airlines completing due diligence.

"It is now clear that process would have resulted in a radical review of Air New Zealand's capital requirements. Even if it had not, time was not on the side of a quick decision.

"The company, not the government, estimated that the earliest a rights issue could have been concluded was mid to late November."

Mr Cullen says the decisions taken this week have in fact speeded up a decision on the airline's future by around two months on the original plan.

"The facts are that the problems go back a long way. They have been compounded by recent events, both in the wider economic environment and in the aviation industry. Activity on this side of the Tasman has not materially impacted on the viability of Ansett."

Despite the government's defence it is unlikely to stave off anger from Ansett's 16-thousand workers.

The Australian government is also caught between a rock and a hard place but it is looking more likely it may be forced to come up with a similar deal for Ansett as the New Zealand government has offered to Air NZ.

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