New legal move blow for Air NZ

By JIM EAGLES

Embattled Air New Zealand yesterday received a further threat of legal action from Australia when the administrators of Ansett said they might, after all, sue over alleged asset-stripping and overcharging.

The move comes hard on the heels of the announcement by the Australian Securities and Investment Commission (ASIC) that it has a taskforce investigating the possibility of bringing a class action against Air NZ over its financial disclosures.

The two actions are thought to be linked in that the $180 million settlement approved by the Australian courts, which absolved Air NZ of any further liability in respect of Ansett, contained a proviso that it would not bar action in respect of any improprieties found by ASIC.

ASIC has already concluded that there is no basis for taking action against the directors of Ansett for breach of their general duties of care or for insolvent trading.

Instead, it has appointed a taskforce to spend three months trawling through the records to see if there are any grounds for bringing an action on behalf of "persons who have suffered damage as a consequence of any failure by Air NZ to keep the market properly informed".

Yesterday's move by the administrators, Mark Korda and Mark Mentha, from troubled international accounting firm Andersen, is assumed to be aimed at keeping its options open if ASIC's trawling operation does find some basis for bringing a case.

The ASIC investigation has been a source of surprise since, under the terms of its secondary listing in Australia, Air NZ was not obliged to follow the disclosure rules of the Australian Stock Exchange but those of its primary listing on the New Zealand exchange.

The NZSE's Market Surveillance Panel has already given the airline a clean bill of health.

As a result of a complaint from an Air NZ shareholder linked with the Business Herald, the Market Surveillance Panel has started an investigation into what relevant information ASIC might have.

Air NZ has said that it has no idea what information the ASIC is acting on and has been unsuccessful in attempts to find out.

Yesterday it was even more forthright in rejecting the claims of the administrators and vowing to "vigorously defend itself".

Managing director Ralph Norris said the allegations of asset stripping were "nothing more than groundless rumours which were circulated when anger over the loss of Ansett was at its peak."

The company denied them at the time and continued to do so.

Norris said the airline was disappointed to see the administrators reviving those claims "after reaching agreement with us to settle all claims between Ansett and Air NZ".

The airline would be contacting the administrators and asking them to give their reasons for "advising creditors that this matter justifies further investigation".

If investors were worried by the administrators' latest claim, it wasn't reflected on the market. Air NZ shares were unchanged yesterday at 33c on light volume.

"The company's denial is again clear and the market seems to be saying 'so what?' " said DF Mainland analyst Bruce McKay.

The administrators are struggling to meet creditor claims for more than $4.2 billion after the collapse of the plan to sell the remnants of the airline to Tesna Holdings.

In the latest report to creditors, Korda and Mentha said that depending on the sale of regional airlines, employees of Ansett, who are owed $866 million for pay and other benefits, might receive 92c on the dollar.

Unsecured creditors were likely to receive nothing. The administrators said they had hoped to give holders of frequent flyer points up to 5c on the dollar but the collapse of the Tesna deal made any return unlikely.

On a more positive note, Korda and Mentha said they had been talking to Virgin, its new shareholder Patrick Corp, Singapore Airlines and Sydney Airports Corporation about the sale of Ansett assets, including its lease over a terminal at Sydney's Kingsford Smith airport.

Among other possible sources of income, the administrators said, were potential claims against Air NZ for "alleged asset stripping, centralisation of treasury function and sweeping bank accounts".

It also alleged "inappropriate charging of fuel and other operating costs" before Ansett's collapse.

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