Air NZ quizzed over Ansett

By DANIEL RIORDAN aviation writer

As Air New Zealand stepped back from the precipice of statutory management, securities regulators on both sides of the Tasman stepped up their investigation into the way the airline has been run.

The Australian Financial Review reported yesterday that Australia's Securities and Investments Commission (ASIC) had asked executives at several of Ansett's banks to hand over documents covering the airline's financial position.

Directors of Air NZ and Ansett have been asked to do the same. All 13 Air NZ directors sit on subsidiary Ansett's board.

ASIC began its investigation almost two weeks ago, looking at whether the airline traded while insolvent - something which Air NZ acting chairman Dr Jim Farmer, QC, has denied.

ASIC asked the New Zealand Securities Commission to look into the adequacy of Air NZ's financial disclosures - a matter which falls outside ASIC's jurisdiction and is covered here by the Companies Act and Stock Exchange listing rules.

The Securities Commission is working with the market surveillance panel on its inquiry, which panel member Bill Falconer says should be completed within about two weeks.

The commission has greater powers of investigation and punishment than the panel.

The panel is also understood to be looking into the actions of shareholder Singapore Airlines (SIA), and whether its actions have been in the best interests of Air NZ - an issue drawn to the panel's attention last week by Act MP and former panel member Stephen Franks.

Mr Falconer could not be contacted by the Business Herald yesterday but he told National Radio that the market had received information from a variety of sources over recent months, none of it from the company.

"We are trying to get a handle on what is and has been in the market and whether ... that meets the disclosure requirements of the company under the act."

In hindsight, the problems of Ansett may not have received the attention they deserved and more may have been "brewing" than had been disclosed, he said.

Shareholders were entitled to know whether they were adequately informed and out of that would come lessons on what kind of continuous disclosure there would be in future, Mr Falconer said.

After Monday's savaging, Air NZ's share price rebounded yesterday.

The A shares, available only to New Zealanders, rose 9c to 27c, and the openly-traded B shares closed 9.5c up at 25c.

The day's action began with a line of 12.75 million B shares being sold at Monday's closing price of 15.5c. Brokers said the likely seller was US fund manager Franklin Resources.

The only other shareholder of that size, apart from SIA and Brierley Investments, is Australasian fund manager AMP Henderson.

Six million A shares and 24 million B shares were traded during the day - 9 per cent of the airline's non-BIL, non-SIA shares.

With Air NZ's future uncertain - not least the prospects of Ansett's administrators being able to claw back more than half a billion dollars in employee entitlements from the parent company - analysts said yesterday's buyers were taking a big punt.

Should the company be put into statutory management, the outlook for shareholders would be bleak, said corporate lawyer Brian Bray.

Mr Bray, a partner at Phillips Fox, said legally nothing would happen to the shares.

They would be worth what anyone was prepared to pay for them - assuming buyers could be found.

Under listing rules the Stock Exchange has the power to suspend trading.

Mr Bray said that under statutory management, shareholders would be wise not to hold their breath for any capital return.

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