Editorial: Airline flies from mess to disaster

A week ago in this column we described the Air New Zealand-Ansett situation as "a mess". In the past seven days it has moved on from there to become an unmitigated disaster. A week ago the future of Ansett looked uncertain but Air New Zealand had every prospect of flying through the turbulence. Now the future of our national flag carrier looks bone-jarringly shaky.

In cutting Ansett loose from any prospect of rescue, Air New Zealand triggered an emotion-charged chain of events. However, the seeds of this disaster had already been sown. That much is clear from the decisive actions of the administrators brought in when Air New Zealand turned its back on the Australian carrier. The almost immediate shutdown of Ansett is conclusive proof that it had already reached the end of the runway.

Air New Zealand executives quoted in the Weekend Herald complained that the state of Ansett's operations were opaque when it was taken over. Unfortunately, they seemed no more transparent at the end. It is a state of affairs for which the Air New Zealand board and senior executives must accept responsibility. Even before the takeover their airline had a sufficient shareholding and rights to demand of Ansett's management the necessary operational and financial information. That lack of clarity must have played a significant part in the drawn-out attempts to rescue the Australian airline and, by implication, that of Air New Zealand itself. And the question marks continue to hover over everything.

Chief among the unanswered questions is Air New Zealand's liability for almost $NZ500 million in staff entitlements. That is an issue in which the Australian Government is taking a keen interest and one it would certainly wish to be placed firmly at the New Zealand airline's feet. Air New Zealand, for its part, will try to distance itself from that liability which would tip its balance sheet beyond the scope of the current rescue package promised by Brierley Investments, Singapore Airlines and the New Zealand Government.

Prime Minister Helen Clark has made it clear that her Government will not accept liability for the Australian workers' losses. Nor should it, although a court decision against Air New Zealand could well see a further state bail-out of the New Zealand carrier that, in reality, would have just that effect. Should Air New Zealand not be found liable, the Australian Government will be forced to compensate workers, probably by new levies. That, in turn, will ensure a continuation of the baying for Kiwi blood that began when Ansett shut its doors.

With the benefit of hindsight, the best solution for both Ansett and Air New Zealand would have been for the Kiwi airline to allow Singapore Airlines to take over the Australian operation in its entirety and to take up a larger holding here. SIA has the ability to manage large airlines efficiently and its no-nonsense approach to business would probably have identified Ansett's operational deficiencies early on. However, that was not to be. Despite protestations, the Governments on both sides of the Tasman are partly responsible for what has happened but the board and senior executives of Air New Zealand have to carry the burden of blame. Vacillation, procrastination and politics combined to create a nightmare.

It is a nightmare that Australians are now fuelling with reactions and comments that are, at least, stupid and, at worst, bordering on a form of xenophobia. It is being fanned by Australian media who suggest that we have a national culpability for the Ansett collapse and a congenital failing that makes us financial cowboys and bad risks. That is rubbish and they know it. New Zealanders could just as easily point the finger across the Tasman at the HIH Insurance collapse that may reach $A4 billion or the $A600 million losses of One.tel when it closed. The people of New Zealand are no more responsible for Ansett's state of affairs than are Air New Zealand cabin and ground crew who have been vilified by their Australian counterparts.

Looking ahead, disaster recovery will take some time and there may be more pain before it is over. New Zealand taxpayers, for example, had better steel themselves for the loan facility in the present rescue package being fully taken up and extended. Brierley Investments and SIA will also have to dig deeper into their pockets.

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