Virgin Blue denies Ansett merger speculation

MELBOURNE - Discount carrier Virgin Blue yesterday denied speculation that it could be sold to Ansett's would-be owners Tesna, and played down talk of a possible merger.

Virgin Blue's Australian head of commercial activities, David Huttner, said reports of merger talks at Friday's meeting in London between Virgin chief Sir Richard Branson and Tesna founders Lindsay Fox and Solomon Lew were "speculation".

"We had discussions with Ansett, but a merger is certainly something that has not been determined at this point in time," Mr Huttner said.

"We've discussed a variety of options and in no way would we indicate that we are moving towards any sort of possible merger."

Sir Richard also denied newspaper reports that Tesna was considering a full takeover of Virgin Blue.

"The story is absolute bollocks," he said.

"Someone has clearly decided to take the Age [newspaper in Melbourne] for a ride.

"We're not sure what their agenda is, but I think people know we tore [up] a $A250 million [$308 million] cheque. That reflects our attitude towards that proposition."

Last September, Sir Richard tore up a cheque from Air New Zealand, Ansett's then owner, saying: "This Virgin bride is not for sale."

Mr Huttner said talks covering several issues would resume between Tesna and Virgin Blue this week.

Virgin Blue was talking to other potential strategic investors, he said, but would consider only one that would take a minority stake.

"We would never rule out most possibilities but we are willing to rule out that we will be doing a sell-out," he said.

"A merger is certainly not impossible but it is certainly not likely to occur."

Virgin and Mr Lew and Mr Fox said: "Any meetings are held on the clear understanding that Tesna remains committed to the completion of the sale agreement with the Ansett administrators regardless of the outcome of the discussions."

The talks will be held amid reports that Ansett's administrators, Mark Mentha and Mark Korda, are preparing to cut flights to stem the airline's losses.

A Federal Court judgment is due this week on the legality of the administrators' decision to trade while losing $6 million a week.

* European plane maker Airbus says the Tesna consortium has ordered 30 aircraft from its A320 range as part of a plan to revive Ansett.

Airbus said Tesna would buy 30 A320s and A321s, but it did not specify how many of each.

The consortium had also taken an option on another 10, it added.

Airbus did not give a value for the deal.

Under the terms of Tesna's offer to repurchase Ansett, approved by creditors last month, the consortium had said it planned to buy 29 Airbus aircraft for about $A3 billion.

Tesna said the extra planes would allow Ansett to further expand its scheduled services within Australia.

"I have confidence that this acquisition provides the basis for Ansett to grow and prosper in an extremely competitive and growing market," Mr Lew said.

Deliveries of the planes were scheduled to begin in the second half of this year.

European Aeronautic Defence & Space, or EADS, owns 80 per cent of Airbus, and British defence company BAE Systems holds the remaining 20 per cent.

- REUTERS

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