Dialogue: Government gives succour to failure

By STEPHEN FRANKS

Most New Zealanders want a thriving Air New Zealand. Instead, it seems we are to get a national humiliation. The Government's dithering over the bad news is making the All Blacks' "debriefing" delay in coming back from Sydney look like "straight home after work".

Nothing has been explained. During months of rumours a few elements remain consistent: the catastrophic performance of Ansett Australia, the possibility of Government money, and permission for Qantas or Singapore Airlines to rescue the company.

The Government is going to relearn bitter lessons - that business rescues do not often rescue jobs and businesses. Instead, they rescue businessmen, and often those to blame - in this case probably Brierley Investments.

Before the mistakes are repeated, we need some explanations. Were BIL and Singapore in control? If so, why, given the prohibitions in the constitution? Have those shareholders blocked the company from a straightforward discounted-rights issue to meet capital needs?

A year ago New Zealanders reasonably expected Air New Zealand to be a vibrant international competitor, under the effective control of New Zealanders.

It could capitalise on good operational performance. Accepted wisdom said that getting 100 per cent of Ansett had snookered Singapore Airlines into supporting the company. They could have an interest in Ansett only through a minority investment in Air New Zealand.

The Star Alliance assured the international links we needed to be in the airline top performance league. BIL was said to be rejecting Singapore Airlines' offers of well over $3 per share. Air NZ shareholders could draw encouragement from the success of small challengers like Virgin and South West, against giants failing to cope with "open skies" changes.

The Air New Zealand constitution had clear rules about ownership. Consistent with international norms it means the company must be substantially owned by New Zealanders. And though Asian-controlled Brierley seemed to be calling the shots, the Kiwi Share meant that the constitution could not be changed without Government approval.

What went wrong? We need to know before New Zealand throws good money after bad.

Are the Ansett capital needs now beyond the capacity of existing foreign and New Zealand shareholders, even with the extended institutional definition of New Zealand nationality? Is Ansett salvageable by New Zealanders, in the face of obdurate Australian unions and their colluding politicians? Is Singapore happy to see us try, because change management is always hard and damaging to reputations?

Will Singapore just wait until the hard work has been done, then pick Ansett up from a burned-out Air NZ? Should the company dump Ansett now for whatever it might fetch?

Are reciprocal booking rights and joint marketing worth pouring profits from high New Zealand fares into a risky Australian venture? And what about management of Air NZ?

Were the decisions being made by the dominant shareholders? If so why did the board not eject a damaging foreign shareholder?

It is a nonsense to say that foreign ownership and control do not matter. For a start, vital parts of the business will move to where the control is, and vital New Zealanders will move with control.

There are all kinds of stupid laws and policies to be changed to ensure we can again earn the self-determination we want, but we have to start somewhere.

In this case the foreigners held their Air NZ shares knowing exactly what the rules were. Now they want them changed to their advantage after bringing the company to its knees.

* Stephen Franks is an Act list MP.