Between the lines: Cushing may reach for axe again as Ansett disappoints

By DANIEL RIORDAN

"The result was not satisfactory," said Sir Selwyn Cushing yesterday, with the air of a man ready to spill more blood on the executive suite's floor.

But it won't be the local carpet that will see more stains, as Air New Zealand's executive chairman was talking about the desultory performance of Ansett Australia.

His comments have the clout provided by the showing of the Air New Zealand half of the combined operation, as it was largely responsible for the lifting of overall trading profit.

Both operations faced fuel increases of almost 50 per cent over the year, exacerbated by the limp kiwi and the Australian dollar. Both faced stiff competition, Ansett domestic in particular from the new entrant Impulse.

Ansett's domestic operations staggered to a pre-tax profit of $A101.9 million ($134 million), 38 per cent below last year's.

Air NZ's domestic financial performance was not disclosed, but the domestic and international businesses combined to lift the group's trading profit by 34 per cent.

How badly has Ansett Australia been run?

Not too long ago, Ansett's executive chairman, Rod Eddington, was being touted as a leading candidate to front a combined airline should Jim McCrea not be required (he wasn't).

Instead, Mr Eddington left to run British Airways.

Australian analysts still bemoan his loss and the general unpleasantness of Kiwis running an Australian icon.

When Sir Selwyn put the knife through Ansett's top brass this month, moving Air New Zealand executives into most of the top jobs, the Aussies reacted with horror, but on yesterday's results they have little ground on which to base criticism of Kiwi aggressiveness.

But pundits on this side of the Tasman are scratching their heads over a different matter, the decision to pay another unimputed dividend in October, about the same time as the company wants to have a $285 million rights issue to pay for the acquisition of Ansett.

They question the tax efficiency to shareholders of such a move, arguing it might make more sense to cancel the dividend, retaining the $51 million the airline is set to pay out, and trim the rights issue accordingly.

Those missing the dividend payout the most would be Brierley Investments (set to pick up $15.3 million) and Singapore Airlines ($12.75 million).

Brierley looks to have little chance of getting extra money for the Air NZ shares it sold to SIA.

When SIA lifted its stake in Air NZ to 25 per cent, paying Brierley 300c a share, it agreed to pay a further 50c a share if the airline increased its June 2001 year earnings before depreciation, rent, interest and taxes by 30 per cent.

SIA will pay a further 50c a share if Air NZ lifts those earnings by 65 per cent.

However, yesterday's 9 per cent gain to $684.2 million leaves those targets looking doubtful.