Ansett sees fleet upgrade financing approval in July

7.00 pm

SYDNEY - Troubled Ansett Australia is confident of getting board approval in July for its massive fleet renewal programme, chief executive Gary Toomey said today.

"Subject to having a good business case and being comfortable (that the plan is sound), I would expect that in principle, yes, we would have approval," Toomey told Nine Network's Business Sunday television programme.

Australia's Civil Aviation Safety Authority (CASA) grounded all 10 of Ansett's 767 aircraft just over a week ago on the airline's busiest ever travel day after a string of maintenance check lapses on the aircraft, all five to 18 years old.

CASA warned it would issue a notice on April 20 giving Ansett until May 4 to prove it should keep its licence, but the airline has averted the shutdown threat notice.

Ansett, owned by Air New Zealand, plans to go to the board in July with a five-to-10 year fleet renewal plan, aiming to seek bids from Boeing or Airbus later in the year.

Toomey reiterated funding for the new planes would require new debt and equity.

He said he hoped for an increased involvement from Singapore Airlines (SIA), which owns 25 per cent of Air NZ.

However, he said a financing plan must work without SIA.

"Look, we will be pleased with an increased involvement from Singapore Airlines (but) we have to be able to do this without them if the New Zealand government doesn't allow that to occur."

He said Ansett would press on with its upgrade strategy.

"We obviously have to have alternatives depending on what the rules are, but yes, either way we can achieve this plan."

SIA has said it wants to own 40 percent of Air NZ.

On Sunday, Toomey said it was too early to discuss the sum required to upgrade the fleet.

"We have opportunities for mezzanine and other straight debt financing and leasing opportunities," said Toomey, who quit his finance director post at Australia's dominant Qantas Airways Ltd in December to head Ansett.

"When you spread that over the five to 10 years, it is nothing like the figures, on an annual basis, that people are speculating about."

Toomey said on Sunday the lower maintenance costs of the newer planes would offset the money needed to lease the aircraft. "Pretty much, most of these exercises have a zero net present value differential," Toomey said.

- REUTERS