Cullen flies through flak over Air NZ

By FRAN O'SULLIVAN, GREG ANSLEY and DANIEL RIORDAN

Finance Minister Michael Cullen emerged unscathed from Opposition interrogation over letters which reveal that the Government was repeatedly warned its delays were jeopardising Air New Zealand's future.

Repeated questions from National leader Bill English in Parliament yesterday as he tried to prove Government dithering contributed to the airline's failure failed to draw any blood from Dr Cullen.

The letters - revealed exclusively in the Herald yesterday - show the Air New Zealand board was gravely concerned that a Government decision on August 1 to reopen negotiations with Qantas would stymie a proposed Singapore Airlines-led bailout.

But Dr Cullen told Parliament that while Air New Zealand was concerned that the Qantas proposal would delay or frustrate the recovery plan, the Government and its negotiators "were careful to ensure the negotiations with Qantas and Singapore Airlines were carried out in parallel not in tandem".

"It was Singapore Airlines that needed more time to prepare for negotiations, and it was they who put the dates back.

"The Crown negotiators were always ready to meet before the parties associated with Air New Zealand were, so it is simply wrong to say that Government actions delayed decisions.

"In addition, Air New Zealand's assessment of its recovery requirements continued to change subsequent to that letter."

Dr Cullen also took a swipe at former Air New Zealand chairman Sir Selwyn Cushing, who claimed stalling by Canberra and Wellington had killed the Singapore deal to put $650 million into the airline.

"As gently as I can, I think Sir Selwyn is the person who's singularly most responsible for the loss of shareholder value in both BIL and Air New Zealand," he said.

"It's certainly true that due to the incompetence of the Air New Zealand board and the incompetence of Sir Selwyn Cushing's chairmanship in signing up to purchase the 50 per cent remainder of Ansett without doing due diligence ... this airline got into serious trouble and now the taxpayers are rescuing it."

The future of Air New Zealand's $885 million taxpayer-financed bailout will be determined today in the Australian Federal Court.

A Federal Court judge is expected to ratify Air New Zealand's $A150 million ($181.72 million) cash offer to limit its liability to Ansett's administrators.

But if the approval is not granted, the airline could yet go into statutory management.

In Australia, the fate of Ansett has become embroiled in the November 10 federal election campaign.

The Government has been accused by unions and Labor of sabotaging the administrators' attempts to resurrect Ansett by its insistence that the Air NZ payout be used to pay workers' entitlements rather than fund the airline's revival.

Opposition Leader Kim Beazley, addressing a rally of Ansett workers at Brisbane Airport to launch a new policy to guarantee workers' entitlements in company insolvencies, promised to get the airline back in the air.

He said the administrators were clearly concerned that the Government's threats to withhold the $A10 levy on all air tickets until all Ansett assets had been exhausted would prevent the airline's rescue.

"The job of this Government is to roll up its sleeves and get you back in the air," Mr Beazley said.

* News Corporation chairman Rupert Murdoch told his company's annual meeting yesterday that Air New Zealand blocked the group's plans to expand Ansett internationally.

"We had ambitions to take it on routes which we were entitled to take which certainly would have been profitable," he said.

"At every point, Air New Zealand as a 50 per cent shareholder blocked us."

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