The fate of Australia's second-largest airline, Ansett, was hanging in the balance yesterday as its parent company, Air New Zealand, looked set to cut it loose to ensure its own survival.
After emergency board meetings in Australia and New Zealand overnight Sunday, Air New Zealand said a financial rescue package being negotiated among its major share holders and the New Zealand government did not include Ansett.
"No, this is a package for Air New Zealand and our discussions with the Australian government [about Ansett's future] are continuing," Air New Zealand Acting Chairman Jim Farmer told Radio New Zealand yesterday.
Air New Zealand's financial problems were exposed late Friday when it revealed Ansett is losing A$1.3 million (US$676,000) per day. The Australian airline, which employs 16,000 workers, also needs a A$4 billion (US$2.1 billion) fleet upgrade.
Unions have demanded the Australian government step in with a rescue package to keep Ansett airborne, but Prime Minister John Howard has ruled out any kind of government cash injection.
After talks late Sunday with New Zealand's finance minister, Michael Cullen, Australian Trea-surer Peter Costello repeated the government's opposition to a bailout.
"The ownership of Ansett is in the hands of a privately owned New Zealand company," Costello was quoted as saying in yesterday's edition of the Sydney Morning Herald. "This is a matter for the shareholders and directors of that company to determine its commercial outcome."
But Ansett and Air New Zealand chief executive Gary Toomey said he had spoken to Howard, who is in Washington, DC for an official state visit.
"Today, we'll be seeing what we can achieve with the Australian government to find an outcome that'll be in the best interests of Australian travelers, our loyal Ansett staff, as well as our shareholders," Toomey said.
Costello has cleared the way for another foreign airline to take over Ansett, saying the proposal would receive ``very favorable'' consideration from the Australian government's Foreign Investment Review Board.
The majority state-owned Singapore Airlines (SIA), which already owns 25 percent of Air New Zealand, is considered the most logical candidate for a takeover of Ansett. However, the Singapore government said Sunday it would not get involved in any kind of rescue plan for Air New Zealand.
In a statement issued yesterday, Farmer said talks of a possible sale of Ansett to Qantas Airways, had ceased because of opposition from the Australia's competition watchdog. The Air New Zealand Board will make a further announcement about Ansett's future by Thursday when it presents the company's annual results, Farmer said.
The crisis at Ansett is another blow to Australia's volatile aviation industry, which has seen cut-price domestic carrier Impulse Airlines and the nation's largest private regional airline, Flight West, fold this year.
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