Air NZ nears deal on rescue plan

By FRAN O'SULLIVAN and DANIEL RIORDAN

Air New Zealand has negotiated a draft settlement with Ansett's administrator to limit its financial liability to its Australian subsidiary.

The settlement deal - which will have to be put to an Australian court - was the last issue standing in the way of finalising the Air New Zealand bailout.

The recapitalisation plan and Ansett agreement are to go before Air NZ directors at a formal meeting today, followed by an announcement of the details.

The administrator filed an action against Air New Zealand after it cut Ansett adrift without paying 16,000 Australian workers their entitlements.

Australian workers threatened a boycott of Air New Zealand and Prime Minister Helen Clark's plane was blockaded at Melbourne airport as fury over the airline's actions, which they claimed had deprived Ansett workers of $A500 million ($589 million) in entitlements, took its toll.

Administrator Mark Mentha last week asked the Australian Industrial Commission to adjourn proceedings while he negotiated with Air New Zealand over a settlement deal.

"Ansett and Air New Zealand have both been through very tough times. We have an active dialogue going with Air New Zealand," Mr Mentha said.

"We want to make sure there are two airlines that survive out of all these issues and I am confident we will get there."

Air NZ acting chairman Jim Farmer rejected as "entirely unfounded" claims that the airline was poised to announce a massive management shakeout involving the replacement of chief executive Gary Toomey and other executives he had head-hunted from Qantas.

"Gary and the executive team have prepared a number of proposals for restructuring that will be considered by the board after negotiations on the recapitalisation have been completed," Dr Farmer said.

The Sydney Morning Herald had reported that sources in the airline's Auckland head office had said Mr Toomey and the executives were "on the chopping block". The newspaper tipped Andrew Miller - "considered the best of the executive team" - to take over as chief executive.

Brierley Investments managing director Greg Terry has yet to respond to the market surveillance panel's request for an explanation of comments he made about Air New Zealand's share price and its recapitalisation needs.

Mr Terry, an Air New Zealand director, said the $300 million that Singapore Airlines and BIL originally planned to inject was not enough to salvage the business.

He also said the airline's share price could double "fairly quickly" if there was an announcement that it would continue with full support.

His comments prompted the panel to halt trading in Air NZ shares on Friday, for the second time in a week.

Panel chairman Bill Falconer said yesterday that the panel was in no doubt Mr Terry had made the comments attributed to him, but had yet to hear back from him.

Mr Falconer acknowledged it was unusual for a response to take this long but said there were no ramifications for a late reply.

The substance of the response, when it came, would determine what action the panel took.

nzherald.co.nz/aviation

nzherald.co.nz/travel