Editorial: Keeping the koru up with the best

An advertisement placed by the First Travel Group of travel agencies in the Herald and other newspapers yesterday offered a word of encouragement to the staff of Air New Zealand. It is a message that deserves the widest endorsement.

The past few weeks must have been devastating for the airline employees as the board's abysmal performance over Ansett became ever more apparent. Worse, when the chips were down it would have become evident to the staff that the company's major shareholders did not share the same commitment to the airline. Yet through all the turbulence at the top, Air NZ pilots, cabin crew and terminal staff have put the best possible face on the airline and maintained their professional standards. It cannot have been easy.

Yesterday was no easier as they waited to see whether the company is put into statutory management, a step the Government was considering as a last resort if the principal shareholders, Brierley Investments and Singapore Airlines, would not come up with more capital quickly. Statutory management would at least hold off creditors and keep the airline flying so that it might trade out of its present difficulties. The efforts of the staff have done much to demonstrate that the airline deserves to be helped through this rough patch.

Despite everything, Air NZ's operations continue to rank with the world's finest. Yesterday we reported that readers of Conde Nast Traveller voted it the fifth-best long-haul leisure airline this year. Air NZ is too good an airline to be brought down by an ill-considered investment.

If its major shareholders cannot see the underlying value, the Government will have to carry the company for the time being. But surely Singapore Airlines can see past the present share price.

It was not so long ago that SIA was offering to recapitalise our national flag-carrier at nearly double the present share price, and a year or two previously it was as keen as Air New Zealand to own Ansett Australia.

It is hard to believe that it took a negotiator for the New Zealand Government to point out the parlous state of Ansett. Airlines are said to run on air in more ways that one. Confidence sustains them. Had the Government quickly agreed to the SIA offer, the problems of Ansett might now be under ruthless repair. The staff, who have enjoyed featherbed conditions under Australia's old domestic duopoly, would be complaining as loudly as they have been since Ansett's collapse. Cost cutting would be under way and uneconomic routes closed or sold to smaller operators.

But once the dimensions of Ansett's problems were pointed out, neither SIA nor Qantas wanted to buy into them. Ansett had to be divested and it is proving more difficult than the Government or Air NZ imagined. The $850 million bail-out agreed for Air NZ on September 13 will not be sufficient if the company proves liable for Ansett's debts and staff claims. At the very least Air NZ urgently needs that $850 million boost, which still depends on due diligence checks.

If the Government were to convert its $550 million contribution from loan money to equity, it could buy a majority stake in the airline. It says it does not want the risk, but the underlying quality of Air NZ and the commitment of its staff seem worth the investment. If taxpayers have to put up the money, they should reap the reward.

nzherald.co.nz/aviation

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