Ansett rescue deal boosts government ahead of election
Two of Australia’s most prominent businessmen on Thursday put together a A$3.6bn deal to rescue Ansett, the country’s second largest airline, in a lift to the government ahead of Saturday’s closely-fought federal election.
Andersen, which has administered Ansett since it collapsed in September, said Solomon Lew and Lindsay Fox agreed to buy the Melbourne-based group’s core airline business for A$1.1bn (US$1.6bn) in cash and assumed debt and would also spend more than A$2.5bn on a new fleet of Airbus aircraft.
The Fox-Lew consortium, Tesna – Ansett spelt backwards – also agreed to take on 4,000 of the airline’s 17,000 employees. But the proposed deal, preferred over a rival bid from employees, also boosted the chances that another 2,500 jobs at the group’s regional subsidiaries could also be saved. Andersen said the airlines, whose flights interconnect with the main carrier’s, would now be much easier to sell.
The collapse of Ansett, an important part of Australia’s transport and tourism infrastructure, was an embarrassment to the government in the election campaign. Among other things, it has been heavily criticised for lobbying – at Qantas’s request – against a proposal earlier this year from Singapore Airlines and Air New Zealand, Ansett’s former parent, that might have saved the carrier.
However, the administrators warned that conditions had been attached to Thursday’s deal by Mr Lew, a Melbourne property tycoon, and Mr Fox, the owner of a large trucking and transport group, and that there were issues still to be resolved with whichever side won the election.
In particular, it remains unclear whether the A$195m raised from a A$10 levy on domestic air tickets, to help Ansett honour obligations to employees, is a grant or a loan.
Andersen said that, although the rival employee consortium had come up with an excellent business plan, it had been unable to raise funding quickly enough.
Tesna’s proposed deal with Airbus was also a decisive factor.
“By bringing in new aircraft this deal will solve one of Ansett’s most significant problems, namely the age and complexity of its fleet,” said Mark Mentha, the administrator.
Although Ansett experienced maintenance difficulties, the main reason for its collapse was a vicious price war in the domestic market, partly sparked by the establishment last year of Sir Richard Branson’s no frills Virgin Blue.
Andersen said it hoped to conclude a deal by the end of January and that in the meantime SIA would stay on as consultant to Ansett. Tesna also suggested SIA – like Ansett a member of the Star Alliance – might be invited to take a stake in the carrier.
The 29 Airbus aircraft were destined for United Airlines, one of the US carriers hardest hit by the September 11 terrorist attacks.
Qantas, which moved quickly to capitalise on Ansett’s difficulties and build market share, struck a similar deal with Boeing under which it would take over aircraft ordered by American Airlines.
Financial Times
