Air NZ risks receivership over Ansett's debts

By STAFF REPORTER and NZPA

Air New Zealand is in danger of being put into receivership and its rescue plan is on shaky ground because of mounting pressure on it to cover Ansett employees' entitlements, sources said last night.

Air NZ's cornerstone shareholders and the Government have come up with a rescue plan for the national carrier, but that was based on Ansett being divorced from Air NZ, and a share price of 67c a share.

All that has changed since Friday, when the share price plunged to 50c and there were calls from Australia to make Air NZ liable for some of Ansett's debts, especially staff entitlements. This has placed a lot of uncertainty on Air NZ's future.

"If Air NZ is going to be liable for a lot of the debts of Ansett, like the employee entitlements, Air NZ will be put in receivership," one source said.

The Treasury had looked at the receivership and statutory management options last week, before the rescue plan was agreed.

As a result, shareholders Singapore Airlines and Brierley Investments, along with the NZ Government, were revisiting their options, sources said.

The parties have four to six weeks to complete due diligence before committing themselves to the deal.

Placing Air NZ in receivership would be the most effective means of safeguarding the carrier, ringfencing it from Ansett Australia.

Ansett's staff would become unsecured creditors, rather than enjoying the preferential position in the queue they could hold now.

Sources said receivership would allow the carrier to continue flying while the receiver traded the company out of trouble or found a buyer in an orderly fashion.

Angry Australian unionists are threatening a boycott that could force Air NZ out of their country amid growing fallout from the Ansett Australia collapse.

But amid the Kiwi-bashing, there was a glimmer of hope yesterday that Australia's second-largest airline may not yet be gone for good.

As the Australian Council of Trade Unions warned that up to 100,000 jobs would be lost if Ansett died, the airline's administrator, PricewaterhouseCoopers accountant Peter Hedge, hinted of signs that Ansett planes could be flying some routes again by tomorrow.

He said he was talking to at least one potential buyer, and asked all Ansett staff to stand by for more news.

Earlier in the day, the Australian Services Union, which represents 5500 Ansett employees, said it would launch a campaign to boycott Air NZ, despite strong objections from Prime Minister Helen Clark.

And Australian Workers Union national secretary Bill Shorten told a rally of thousands in Melbourne that unless Air NZ fronted up to unions by Friday "we will commence industrial action and kick them out of Australia".

Rampant attacks on NZ across the Tasman suggest that any such campaign would win strong support. The grounding of Ansett has become the biggest industrial disaster in Australian history in terms of job losses - and Air NZ is getting most of the blame.

Late yesterday the airline called a press conference at which chief executive Gary Toomey said he was devastated by the Ansett collapse and had huge regrets about what had happened. He promised that his airline would not try to recover costs by hiking airfares at home, but refused to give any assurances about possible redundancies at Air NZ.

Mr Toomey shifted much of the blame for the problems on to the airline's shareholders and the Government for not agreeing to a viable rescue package.

He said the Ansett staff payouts were a matter for Air NZ's board and the voluntary administrator.

Air NZ said yesterday all its flights to the US and Australia had resumed.

www.nzherald.co.nz/aviation

www.nzherald.co.nz/travel