Air NZ's Ansett unit on its knees, sources say

SYDNEY - Ansett Australia lost $A119 million ($144 million) in the half-year to the end of December, the Sydney Morning Herald reported yesterday.

Quoting analysts and former executives, the paper said that although Air New Zealand would not detail Ansett's position, former Ansett executives had, and the figures had been verified by airline analysts in New Zealand.

"According to airline analysts, Ansett's problems are so severe that only a massive capital injection from Air New Zealand's 25 per cent owner, Singapore Airlines, will solve the problems," the report said.

"Insiders say Ansett is only just holding on to its major corporate accounts and chief executive Gary Toomey had frantic meetings with several major accounts, after the grounding of the airline's Boeing 767s, to convince them not to defect to Qantas."

Air New Zealand's first-half results in February were described then by one broker as "plain nasty."

The company reported a net profit of $3.8 million, down more than 95 per cent on the previous first-half. Ansett and Air NZ accounts were not separately disclosed.

The airline said the introduction of GST and aggressive airline competition in Australia combined with 10-year highs in fuel prices were factors behind the appalling group result.

It warned that the second-half outlook was uncertain "with potential for further deterioration in the operating result in the short term."

It also admitted that at $580 million it had probably paid too much for Ansett Australia in June and said it was focusing on boosting Ansett's flagging market share. The integration process was going slower than expected.

Air NZ is 30 per cent owned by Brierley Investments.

- NZPA