Air NZ faces Ansett worker buyout deal

By GEOFF SENESCALL

Air New Zealand is expected to meet employees of Ansett Australia shortly now they have gone public on a buyout proposal for News Ltd's 50 per cent stake in the Australian airline.

A union official and buyout steering committee member Iain Lang said from Australia that structured proposals had been put to boards of both Air New Zealand - the other 50 per cent owner of Ansett - and News.

He hoped to meet both parties before the end of the month.

Air New Zealand could not be contacted last night. But the airline board is understood to have had the employee buyout proposal since October.

Air New Zealand has been outspoken on its desire to own 100 per cent of Ansett.

But ongoing negotiations with News to buy its 50 per cent have foundered over price.

Air New Zealand has pre-emptive rights over that stake. Last year it effectively blocked News' plan to sell its Ansett shareholding to Singapore Airlines for $A500 million.

However, Australian aviation has been turned on its head by the announcement late last year that Sir Richard Branson's Virgin Group was entering the market. He plans to challenge the profitable duopoly between Qantas and Ansett from around July with cheap services.

Virgin also said last week that it would talk to Singapore Airlines this week about becoming a partner in its Australian start-up venture.

Mr Lang, who is federal president of the Australian Licensed Aircraft Engineers Association, said the decision to go public before sealing a deal was to help eliminate the uncertainty over the ownership structure of Ansett.

No price had been put on the table. But Mr Lang said the feasibility for the current buyout proposal was done on a figure of $A500 million.

"However, since those discussions originally began with Singapore, $A200 million worth of capital assets have been sold ... and Virgin has spooked the market place.

"It has driven down the market price of Qantas so I can't see why the market price of Ansett would not have deteriorated."

Funding for the buyout would be through a mixture of debt and equity with shares being vested in the employees through a mechanism linked to future remuneration and productivity gains.

Committee spokesperson Captain Gavan Spring said the plan had strong support from employees (who number around 12,000) and unions associated with the airline.

The committee said it was working with Deutsche Bank, Remuneration Planning Corp and New York-based investment bank Keilin and Co, which was used by pilots during their successful bid to gain control of United Airlines in 1994.

"An employee buyout of News Corp's 50 per cent holding would be good for the airline, beneficial to shareholders and great for the country as it will restore a significant level of Australian ownership in an important corporate icon," Captain Spring said.

Mr Lang believed its offer would be a positive for Air New Zealand.

"It would be the only corporate interest in Ansett. They wouldn't be competing with another airline, corporation or another company limited in terms of the agenda for Ansett as it goes forward," he said.

But Mr Lang stopped short of saying that the proposal would hand full control to Air New Zealand. Employees would have full representation at the board level.