Before Air New Zealand is allowed to just walk away from Ansett at the behest of its Australian bankers, the shareholders and these very same establishment banks should take a huge haircut before taxpayers or Qantas are allowed to step in.
And Rod still sits on the News Corp main board to this day and is helping call on the shots on this ridiculous notion of Qantas buying Ansett. News Corp allowed Ansett’s fleet to become the world’s second oldest and also tolerated the Noah’s Ark lunacy of Rupert’s mate Sir Peter Abeles in buying two of every different type of plane.
With PMP and Ansett both going up in flames, the lesson from all this is to never buy a business from Rupert.
UNIONS NEED TO WAKE UP TOO
The Ansett collapse is a classic case of balancing the interests in Australia between shareholders, workers and customers.
The cosy duopoly permitted union feather-bedding at Qantas and Ansett for years and customers paid through the nose as a result.
You always get more concentrated industries when you don’t have flexible labour markets because smaller competitors invariably fall over and get snapped up. Now we’ve got Qantas looking at buying Ansett for $1 which would be an absolute disaster for consumers.
The fact of the matter is that Ansett’s staff ratios are poor by international standards. Even Singapore’s staff costs are 30 per cent lower than Qantas and this, together with Singapore’s great gateway location, has enabled it to become the world’s most profitable airline.
Air New Zealand has been unable to achieve the staff savings it envisaged with the full Ansett takeover and is now in the hands of its bankers, which are largely Australian.
CHARLIE GOODE DOES A RAYNER
The role of prominent Liberal Party donor and establishment figure Charles Goode (club memberships include: Melbourne and Australia for lunch and cigars; Kooyong and Royal South Yarra for tennis; Royal Melbourne and Frankston for golf) is very interesting in all of this.
It looks like Charlie is doing a Mark Rayner. Rayner was chairman of NAB and chairman of Pasminco which has gone done in flames with NAB exposed to the tune of $150 million.
You see Charlie is chairman of the ANZ bank which is heavily exposed to Air New Zealand/Ansett like all of the Australian majors. Charlie is also a director of Air New Zealand, representing his mates from the Singapore Government and Singapore Airlines which own 25 per cent of Air New Zealand.
Make no mistake about it, the Australian banking cartel, which makes $10 billion a year in profits and permitted Air New Zealand to buy Ansett, is now trying to socialise the losses they are about to suffer on their collective $2 billion exposure to Air New Zealand/Ansett.
Charlie Goode is an expert at getting his way with the Howard government as was demonstrated by his Woodside Petroleum campaign against Shell. You see he is also chairman of Woodside and didn’t think it would be in the national interest for Shell to move from 34 per cent to 54 per cent.
The poor old Singaporeans look like they’ve paid about $6 billion too much for Optus and are now trying to save something from the wreckage of their $250 million investment in Air New Zealand.
Clearly relations between Branson and Singapore Airlines are pretty ordinary these days after Branson knocked back their $250 million offer last week.
When Branson got into financial strife a couple of years back he sold 49 per cent of Virgin Atlantic to Singapore Airlines for almost $1.5 billion but Virgin Blue is 100 per cent owned and he remains reasonably cashed up.
THE ANZ CONNECTION
The mainstream media is yet to pick up on the ANZ connection in all of this. You see Qantas chairman Margaret Jackson just happens to sit on the board of ANZ and has made more than a $1million from her options and directors fees over the past eight years.
And Air New Zealand chief executive Gary Toomey also sits on the ANZ board so it would be fascinating to know what’s been going on inside the board room. Just how much is ANZ exposed to Air New Zealand.
CAN AIR NEW ZEALAND JUST WALK AWAY?
Air New Zealand claims it has legal advise that there is nothing stopping it cutting Ansett loose, even thought the business is 100 per cent owned. But this again comes back to the question of bank guarantees. The dopey New Zealand PM Helen Clarke can claim that Ansett is Australia’s problem but there are Aussie finger prints all over Air New Zealand, most importantly in the banking syndicate.
The Australian corporate directors club, which is thoroughly represented on the boards of our banks, has decided to try and socialise the losses of Ansett to protect their bank profits. The Air New Zealand CEO is an Australian who sits on the board of one of these banks.
And even the chief executive of key Air New Zealand shareholder Brierley Investments is an Australian called Greg Terry, who was poached from CS First Boston’s Melbourne office in 1999.
Brierley Investments is now based in Singapore and they have behaved just as badly as the Kiwi government in trying to stymie the original move by Singapore Airlines to lift its stake in Air New Zealand from 25 per cent to 49 per cent.
LET THE SHAREHOLDERS AND BANKS FOOT THE BILL
Crikey says that the Air New Zealand equity holders should lose everything and the banks should take a severe haircut before us taxpayers get involved in any bailout. And we should not allow a Qantas takeover that breaches the Trade Practices Act by substantially lessening competition. The Australian banks are collectively worth about $140 billion at the moment so a little $500 million haircut would be like water off a duck’s back.
UNIONS NEED A WAKE UP CALL
And the unions should wake up to themselves and accept that we need dramatic productivity gains in the airline industry to remain globally competitive and to stop serious price rises for consumers. A few thousand jobs at Ansett will have to go no matter what happens.
Bill Shorten and Greg Combet were mouthing the usual platitudes to Ansett workers outside the company’s head office yesterday.
The Ansett staff should get together and relaunch their mooted management buyout of last year. Whatever happens, several thousand Ansett workers will lose their jobs because the business has been shown up by Virgin Blue as completely unsustainable.