Air NZ downplays cost of Ansett Australia groundings

9.15 AM

Air New Zealand says it is too early to estimate reliably the daily cost of the groundings of 10 Ansett Australia 767s over the Easter weekend.

However Air NZ chairman Sir Selwyn Cushing said some media reports that the groundings were costing its subsidiary Ansett Australia up to $6 million a day were "mere speculation" and not based on figures from the company.

"It is still too soon to estimate reliably the daily costs being incurred by the disruption to services, but those costs are not expected to reach the lower end of the range suggested. Costs have been minimised by prompt action at all levels throughout the Air NZ-Ansett organisation," Sir Selwyn said.

He said approximately 95 per cent of the 132,000 passengers booked to travel on Ansett Australia flights between Thursday and Sunday were carried on aircraft provided by Ansett and Air NZ despite the grounding of 10 Ansett B767 aircraft on Thursday evening.

The grounding affected 20 per cent of Ansett's total passenger capacity. The airline responded by leasing planes from Air NZ, Singapore Airlines, Qantas, Air Canada, Emirates and Impulse.

Air New Zealand's resident-only A shares last traded on Thursday, the day before markets closed for the Easter holiday period, at $1.01, near a nine-year low, while the unrestricted B shares were $1.45.

Both classes of shares have dived since the airline released an earnings warning last month, and its woes were compounded early last week when seven planes operated by 100 per cent subsidiary Ansett Australia were voluntarily grounded. Most of the jets were flying again a day later.

But on Thursday Australia's air safety watchdog ordered Ansett's 10 Boeing 767 aircraft out of the air indefinitely. The Civil Aviation Safety Authority gave the airline until May 4 to prove it could operate safely or lose its license.

Air New Zealand is 30 per cent owned by Brierley Investments with Singapore Airlines Ltd holding a 25 per cent stake.

Air NZ bought out its 50 per cent partner in Ansett Australia, News Corp, last year in a deal under which the New Zealand national carrier paid a mixture of shares and A$580 million (NZ$744 million) to move to full ownership.

- REUTERS