Air New Zealand: Road to rescue

BACKGROUND:

Air New Zealand has for many years wanted to turn itself from a national airline into a significant Asia-Pacific regional one.

In 1996, after the Australian Government prevented it from setting up its own service within Australia, Air New Zealand bought a half share of Ansett Australia. During 1999, Air New Zealand and its 25 per cent owner, Singapore Airlines, battled for the remaining half share of Ansett. In February 2000, Air New Zealand won and took full control of Ansett at a total cost of about $NZ1.3 billion.

THIS YEAR:

March 19: Air NZ asks the Government to lift foreign investment restrictions to allow 25 per cent owner Singapore Airlines to increase its stake, apparently so that 30 per cent shareholder Brierley Investments can reduce its holding.

April 12: Australian aviation authorities ground Ansett's fleet because of safety concerns and give the airline three weeks to prove the grounding should not be permanent. The airline returns to the skies, but is left facing a $3 billion to $5 billion bill to replace its ageing fleet over the next few years.

May 29: Qantas approaches Air NZ about taking a significant shareholding, a move that would effectively give Qantas a monopoly on Australian domestic air travel. Qantas lobbies the Australian Government for support as New Zealand politicians say they oppose losing New Zealand control of the national airline.

June 20: Singapore Airlines announces a plan to increase its stake in Air New Zealand. Air New Zealand says this is its only practical option as Singapore cannot be forced to sell to Qantas.

June 27-28: Air NZ puts its case to the New Zealand and Australian Governments for Singapore Airlines' stake to increase to between 40 per cent and 49 per cent.

August 1: Australian Transport Minister John Anderson meets New Zealand ministers to push a proposal for Qantas to buy a stake in Air New Zealand.

August 8: Air New Zealand board reaffirms it wants Singapore to increase its shareholding to 49 per cent.

August 13: Air New Zealand says it expects a decision from the New Zealand Government on the Singapore Airlines bid by the end of the month.

August 30: The Government says it is suspending a decision until at least September 12 to wait for Air New Zealand's financial results. The value of Air New Zealand shares begins to fall.

September 4: Virgin Airlines billionaire boss Richard Branson rejects an Air New Zealand bid for his Australian discount airline, Virgin Blue.

September 5: Singapore Airlines rejects an Air NZ offer for it to buy Ansett.

September 6: Finance Minister Michael Cullen says Air NZ's financial situation is worse than anyone expected. The value of its A shares, which can be owned only by New Zealand residents, drop to an all-time low of 80c.

September 7: Air New Zealand reveals Ansett is losing $NZ1.6 million a day.

September 10: Air New Zealand offers Ansett to Qantas, but Australia's consumer watchdog says it is unlikely to approve.

September 12: Air New Zealand asks the Australian Government to underwrite Ansett to keep it in the air. When the Australian Government refuses, Air New Zealand places Ansett in voluntary administration, similar to receivership.

September 13: Air New Zealand reports the biggest loss in New Zealand's corporate history - $1.425 billion - mainly caused by Ansett's losses. The airline gives senior executives bonuses for trying hard to keep the airline afloat.

The Government announces a rescue plan for Air New Zealand involving a $550m loan and injections of $150m each from Singapore Airlines and 30 per cent shareholder Brierley Investments. The package is subject to the Government examining Air New Zealand's books, a process that will take weeks.

September 14: Ansett's administrator grounds the airline, stranding nearly 50,000 passengers and putting 16,000 people out of work, the biggest number of job losses from a single company collapse in Australasian history.

The Australian stock exchange suspends trading in Air New Zealand shares. The New Zealand Securities Commission says it is considering the adequacy of Air New Zealand financial disclosures. An Air New Zealand flight meant to carry Prime Minister Helen Clark from Melbourne to New Zealand is one of several blockaded at Australian airports by angry Ansett workers.

September 15: The Australian Government and trade unions vow to pursue Air New Zealand for about $500 million of entitlements owed to Air NZ workers.

September 16: Helen Clark appeals to Australian unions not to boycott the airline, saying the move could force Air New Zealand under.

September 17: Air New Zealand A shares plunge to 31c in response to newspaper reports that the airline is close to being placed in receivership and fears that September 11's terrorist attacks on the United States are denting airline profitability worldwide.

September 19: Air New Zealand admits it has lost $26 million over July and August. Chief executive Gary Toomey blames Brierley and Singapore Airlines for the company's problems, saying they should have committed to a rescue package early in the year.

September 20: The Stock Exchange's Market Surveillance Panel announces an investigation into Air New Zealand's financial information disclosures.

September 21: A crisis board meeting is held, but adjourns to allow Brierley and Singapore Airlines to consider changed shareholdings. Air NZ says CEO Gary Toomey has received death threats over Ansett's collapse.

September 23: Another crisis board meeting is held as moves are made to bring forward the Government's and shareholders' final commitment to the rescue package.

September 24: Air New Zealand A shares fall to record lows of 18c on the back of media speculation that the airline will be placed in statutory management.

September 25: Helen Clark advises "Mum and Dad" Air NZ shareholders to "hang on to them", prompting a rally in the airline's share price to around 40c and sparking a political furore.

September 26: Trade in Air NZ shares is temporarily suspended as the Stock Exchange considers Helen Clark's comments. Trading resumes after a few hours. The Securities Commission announces it will investigate the comments.

September 27: Air NZ director Greg Terry, chief executive of Brierley, says the airline's shares could be worth 60c once a rescue package is confirmed. Brierley announces a $120m loss because of the Ansett writedown.

September 28: Trading in Air NZ shares is suspended indefinitely at the airline's request. The Securities Commission announces terms of reference for investigation, indicating it will also investigate Mr Terry's comments.

September 29: The Australian Financial Review says Australian Prime Minister John Howard blocked Singapore Airlines' plans to take control of Air NZ, a move that would have saved Ansett.

October 2: Air NZ denies Sydney media reports that Mr Toomey will be replaced as part of a management shakeup.

October 4: The Government announces it is buying a controlling stake in the airline, investing $885 million - $300m as a loan to be converted to shares later and $585m in shares.

- NZPA

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