Ansett flights expected to break even

MELBOURNE - Ansett Australia flights planned to start on major domestic routes from tomorrow will at least break even, the administrators of the collapsed airline said yesterday.

The Australian Government said late on Wednesday it had reached an agreement with the Ansett administrators to start some flights, with five planes to fly on the weekend.

A further six aircraft would be added in the following days.

"On the main trunk routes, clearly we have been trying to find a way to get them in the air on a break-even or small profit basis," said Mark Mentha of administrators Andersen.

The first flights will be from Sydney to Melbourne tomorrow morning, more than two weeks after Australia's second-largest airline was grounded, but the administrators said they were planning flights on other routes as well.

"We are looking over the course of the first two weeks to address Sydney/Brisbane and to look at Sydney/Perth and Melbourne/Perth," Mr Mentha said.

The administrators said they were still working out which of their leased planes would be used, and therefore paid for, and which they would disclaim to release them from payment obligations.

However, they did know that they wanted to hand back two leased 747s to Singapore Airlines and had discussions with the group yesterday about returning the planes.

"We have said that we are not going to operate an international airline at the moment ... why don't we return your planes so you can use them?" said administrator Mark Korda.

The administrators also said the value of its assets was more than $A500 million ($612.4 million) and they were still confident that there was enough money to pay employee entitlements.

The employee entitlements were previously estimated at between $A500 million and $A1 billion.

Unions have welcomed the federal Government's decision to guarantee Ansett tickets, but said it should also underwrite workers' entitlements.

The Government should have thrown a lifeline to the airline weeks ago, Australian Workers Union national secretary Bill Shorten said.

"I do have this mental image that they have been dragged kicking and screaming to do something by force of public reaction," he told Channel Seven's Sunrise programme.

"Underwriting the tickets is a good idea but that could have happened two weeks ago ... I think the Howard Government need to be reminded that they have got to do more.

"One of the things that could be done to make the airline more attractive to purchase ... is to handle the debt, to decrease the debt.

"And the federal Government could help do that by offering to underwrite the entitlements of those people that don't get picked up by a new purchaser."

Discount rival Virgin Blue said yesterday it was negotiating the lease of Ansett planes.

It has also secured the delivery of up to five Boeing 737 Next Generation aircraft by the end of the year, to bolster its nine-plane fleet.

"These extra aircraft will be used to increase capacity on existing Virgin Blue routes as well as launching new services to both capital city and regional destinations," Virgin Blue said.

- REUTERS

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