Air NZ lowers cost of Ansett woes

By Phil Boeyen, ShareChat Business News Editor

Monday 23rd April 2001

Air New Zealand (NZSE: AIRVA) now estimates the grounding of its Ansett 767s will cost a total of less than $3 million, well below last week's figure of up to $2 million a day.

The extra costs associated with the grounding, as well as concerns over Ansett's credibility, last week put Air NZ shares in a tail-spin but they have since steadied to trade this morning at their highest levels since the start of the month.

Part of the reason for the turnaround has been speculation that Singapore Airlines might be allowed to increase it holding in the airline, or could take a direct stake in Ansett.

Air NZ has also received a local boost after its major domestic competitor, Tasman Pacific-operated Qantas New Zealand, went into receivership over the weekend.

On domestic routes Air NZ has increased schedules to accommodate Qantas NZ passengers, with Qantas Australia picking up the tab.

The airline says it has obtained the fleet of eight BAe146 aircraft and associated documentation, which had been leased to Tasman Pacific by Ansett Australia.

Air NZ has also benefited from news of a deal with US engine manufacturers, Pratt and Whitney, which will benefit its Christchurch engineering operation.

In Australia some of the pressure on the company has eased after the Civil Aviation Safety Authority announced on Friday that it would not ask Ansett to show cause why its operators certificate should not be withdrawn.

The first of the 10 Ansett B767 aircraft grounded before Easter was cleared by CASA and returned to scheduled service on Friday.

Air NZ says it hopes that checks on the other grounded aircraft will proceed more rapidly now that information needs and both documentary and physical checking processes have been established.

The company has also released further customer information, and says demand for passenger travel bookings on Ansett Australia's services has been sustained at strong levels since the groundings were announced.

"Passenger "no show" levels have been at normal levels, and, to date, no major corporate travel accounts have been lost," it says in a statement.

However despite the improved news all the company is effectively doing is bringing Ansett back to a feasible operating level.

The much bigger tasks will be sorting out the airline's future fleet structure and trying to figure out how it can rebuild its Australian business, estimated to be losing millions of dollars a week.

AIRVA shares have been trading up 6 cents this morning at $1.16 and AIRVB shares up 2 cents at $1.60.

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