Manufacturing Industry

Qantas asked to bail out Ansett

Airline Industry Information, Sept 11, 2001

Australian Transport Minister John Anderson has asked Qantas Airways, an Australian carrier, to help rescue ailing carrier, Ansett, which is currently owned by Air New Zealand (Air NZ).

Ansett, which has an aging fleet, is reportedly losing AUD1.3m per day and has a massive debt burden. Under a plan proposed by Anderson on Monday evening (10 September), Qantas would take a majority stake in Ansett, but would also be required to give some of Ansett's aircraft, routes and airport terminal to Virgin Blue, a discount carrier. If the plan goes ahead, Virgin Blue would be the only other major carrier operating against Qantas Airways in the Australian domestic market. Virgin Blue has indicated that while it is happy to consider ways in which it can participate in the breakup/rescue of Ansett, it will have to limit its undertakings so that it does not over-stretch its own resources.

Until the deal is completed, the Australian government will apparently provide Ansett with up to AUD200m in working capital. If Ansett were to go under, some 16,000 jobs would be at stake and thousands of travellers would be left stranded. It is hoped that the Ansett-Qantas deal can be finalised within one month, according to the Sydney Morning Herald online edition.

The Australian government was left to intervene on Ansett's behalf after Air NZ conceded that it would have to let go of the subsidiary in order to save itself. Qantas meanwhile has stated that the deal is not a foregone conclusion since it will not jeopardise its own future to save the other carrier. Qantas is particularly concerned about what restrictions the Australian Competition and Consumer Commission may impose in order for the agreement to proceed.

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