Geoff Senescall
Between the lines
Ansett New Zealand is losing millions of dollars as its pilot lockout churns into a third week.
You would think nothing would please its arch competitor Air New Zealand more.
After all, Air New Zealand will be adding nicely to its profits by carrying passengers not prepared to
struggle to fit into Ansett's severely curtailed schedule. Then there is the question of reputation. Who would you prefer to fly with?
But while Air New Zealand might look like it is having a feast, it is not all one-way traffic.
This is because Air New Zealand is understood to be picking up half the tab for any red ink spilled by Ansett.
It does this through ownership of a 50 per cent stake in Ansett Australia.
Air New Zealand bought the holding in 1996. To get Commerce Commission approval Ansett Australia had to shed Ansett New Zealand.
This was done by selling it to News Corporation, which is also the owner of the other half of Ansett Australia.
The rub is, however, that the Commerce Commission was concerned only about operational control of Ansett New Zealand and not the airline's performance.
As a result, it is understood, a mechanism was set up whereby all the financial risk of Ansett New Zealand was shared between News Corp and Air New Zealand.
Although never publicly disclosed, this was accepted by the Commerce Commission.
How this financial risk is represented for both News and Air New Zealand is through Ansett Australia, which owns Ansett New Zealand's aircraft. So to the extent that Ansett New Zealand incurs a loss, the plane rental goes up or down.
The issue of copping half of Ansett New Zealand's losses will not be the only thing concerning Air New Zealand.
It also has to contend with the likely fact that Ansett New Zealand is being readied for sale.
It is no secret that Qantas, keen to cement a close relationship it already has with Ansett New Zealand, has been sniffing around. The rumour mill says that Qantas is willing to pay $40 million but News wants double that.
This has raised suggestions that a motive behind Ansett New Zealand's push for productivity gains from its pilots is simply to prepare it for sale.
Even if the targeted annual cost savings of around $4.7 million come at the expense of Ansett New Zealand's name, it will be of little worry to Qantas.
Ultimately if it is successful the airline will be renamed. The past will be quickly forgotten as Qantas, with the might of its sizable balance sheet, fights with Air New Zealand for a share of the local market.
Here the only winners can be the passengers.