It is 10 years since Australians woke up to TV screens full of scenes of destruction.

The newscasts led with bucket brigades extracting the dead from the hellish scene at Ground Zero on Manhattan Island. The second item was vision of bewildered Ansett passengers trying to break into the Sydney terminal after their red-eye from Perth — the last flight still in the air when the administrator, Peter Hedge, pulled the plug —  had landed after his guards had padlocked the building.

Yet 10 years to the day that Ansett collapsed, and  struggled to make page one or the top of news bulletins in the aftershocks from the 9/11 terrorist attacks,  some of the myths about one of Australia’s highest-profile corporate collapses persist.

The Ansett failure didn’t fling open the door of opportunity to Virgin Blue.  It actually threatened to kill it.  Within 12 days of the Ansett collapse, Qantas had brought 12 of its international jets back to Australia to fly domestic routes, and rapidly took over eight Ansett jets from leasing companies that had quickly worked out that their former customer was never going to pay up.

The toxic consequences of 9/11 for international travel meant that Qantas had  jets it could redeploy to domestic routes on which its major competitor had failed.  It was a huge stroke of good luck for Qantas, but not one it could crow about amid the carnage.

Virgin Blue had only nine Boeing 737s in service.  The Qantas terminals were packed to the rafters with displaced Ansett passengers. The threat that Virgin Blue’s founding CEO Brett Godfrey spotted coming at him like a speeding truck was the Nationals leader and Transport Minister John Anderson, who was publicly advocating government intervention to “save” Ansett.

Fortunately for Godfrey, Qantas CEO Geoff Dixon saw the dangers that posed to Qantas as being greater than the advantages that would have flowed by government pumping money into a dead enterprise and squashing the low-fare revolution that only Virgin Blue was then pursuing, following the exit of Impulse Airways in May that year after it sold itself to the Qantas group.

Qantas and Virgin Blue lobbied hard and successfully against Anderson’s proposals, which were rejected by cabinet. That left  Qantas with a notional 93% of the mainline domestic action, yet as it turned out, unable to stop the expansion of Virgin Blue until in desperation, in 2003, it devised Jetstar as the second-brand, low-cost carrier that began services in June 2004.

In the days before Air New Zealand, which owned all of Ansett, cut it loose to save itself, Ansett was losing in the order of $7 million a day. Bleeding money everywhere, not counting the asset transfers engaged in by Air New Zealand, and particularly after August 24, 2001, when it is now known that its CEO, Gary Toomey, resigned all his Ansett directorships.

Qantas had seen the books and refused to buy Ansett for a notional $1, a day after Singapore Airlines rejected a similar deal, shortly after Richard Branson, who then owned 100% of Virgin Blue, refused to sell out to Singapore Airlines, which was trapped in a disastrous bid to buy 49% of Air New Zealand/Ansett, and in the Virgin Blue terminal in Melbourne symbolically ripped up a fake cheque for the $250 million that the Singaporeans had offered.

The full story of the mismanagement of Ansett by Air New Zealand was only prevented from detailed exposure by Australian approval of a $150 million purchase of indemnity from prosecution by the Ansett administration, and the waiving of a debt of $160 million that the acting-chairman of Air New Zealand, Dr Jim Farmer, claimed was still owed to the company by the subsidiary it had gutted before its unseemly scramble for the exits that ended early on the morning of September 14, 2001.

Read a four part series on the collapse of Ansett in Crikey blog, Plane Talking.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey