Deal to save Ansett falls through

12.15 pm

SYDNEY - The Tesna syndicate led by businessmen Lindsay Fox and Solomon Lew has withdrawn from its proposal to purchase and relaunch Australia's Ansett airlines.

"We have reluctantly reached the conclusion that the sale agreement is not capable of completion and that the process involving Tesna and the Administrators cease," Tesna said in a statement today.

Ansett's administrators have been totting up losses of NZ$7.4million a week in their bid to sell the airline as a going concern and creditors have given the administrators until Thursday to cut a deal to sell the troubled airline.

"We have spent the past five months doing little else but working towards the finalisation of the Ansett purchase," Fox and Lew said in a joint statement.

"We have committed an enormous amount of resources, our professional advisers have worked tirelessly, but the obstacles and hurdles we have encountered from a range of parties have had the effect of consuming both resources and time."

They said the decision to walk away from the deal had nothing to do with the termination of talks with discount carrier Virgin Blue late last week.

Talks between the two rivals had fuelled speculation they might seek to merge to take on the might of Qantas Airways Ltd, which controls almost 80 per cent of the NZ$12 billion domestic aviation market.

"In itself the Virgin Blue/Tesna outcome had very little bearing on where we are today," the joint statement said.

"The simple reality is that the sale agreement cannot be completed by 28 February."

Owed almost NZ$2.5 billion, Ansett's creditors approved the Tesna deal in January whereby Fox and Lew would pay NZ$330 million in cash, assume liabilities of up to NZ$300 million for employee entitlements, and buy 30 Airbus aircraft.

Ansett, which ranked as Australia's second biggest airline behind Qantas Airways Ltd, collapsed on September 14 after being placed in voluntary administration by Air New Zealand as its former parent struggled to ensure its own survival.

- REUTERS

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