Doubts cast on final instalment to be paid to News Ltd

By DANIEL RIORDAN

Air New Zealand still has not paid for all of Ansett Australia, and is keeping mum on speculation that it might seek to avoid final payment for its collapsed subsidiary.

When the national carrier bought the half of Ansett it did not own from News Ltd in February last year, it paid $A580 million in cash, with the balance - then valued at $A100 million - to be paid on deferred settlement any time over 24 months from June next year.

An earlier settlement could be triggered, however, in an "extraordinary event" - such as non-quotation, suspension or delisting of Air NZ shares, a material breach by Air NZ of terms of the agreement with News, a change of control of Air NZ or insolvency. News must also satisfy Air NZ it has met all parts of its obligations in the deed.

News can instead opt for settlement in shares, but analysts said it would want cash because of its unwillingness to be part of the airline business. Air NZ chairman Dr Jim Farmer QC said the airline did not accept that News had any legal rights to trigger a payment, and was not commenting on suggestions Air NZ may seek to wipe the payment.

News said the agreements remained in place.

News chief operating officer Peter Macourt said the business it sold Air NZ was "in very good shape".

"It is clear the problems confronting Ansett arose during Air NZ's time at the helm."

He said News was unaware of any engineering problems when the final sale agreement was executed in June last year, and said Air NZ had spent considerable time reviewing engineering with Ansett's management before the sale.

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