Statutory management an option, says Clark

By VERNON SMALL and FRAN O'SULLIVAN

Prime Minister Helen Clark has raised statutory management as a viable option for Air New Zealand if its major shareholders cannot reach agreement on a rescue package.

Pressure is mounting to place the national flag carrier into statutory management to preserve the business and ensure tickets are honoured.

The Government can appoint statutory managers when a corporation is experiencing severe financial difficulties and no other sustainable remedy is available; no other conventional market or legal remedies can adequately protect the public; or shareholders' or creditors' interests are believed to be at risk.

The Air NZ board adjourned a crisis meeting on Friday to allow its shareholders - Brierley Investments and Singapore Airlines - to see whether they could bring forward a capital commitment to support the embattled airline rather than waiting three to five weeks to complete due diligence.

Acting chairman Jim Farmer has given the big shareholders until early this week to consult their own boards of directors and the Government on a new shareholders' agreement for Air NZ before he reconvenes the board meeting.

Air NZ's sharemarket value plunged to $210 million on Friday, from almost $800 million three weeks ago, as investors dumped airline stocks around the world.

If Singapore Airlines is reluctant to lose more money on its $520 million investment in Air NZ, rival suitor Qantas could yet return to the frame as a new cornerstone shareholder, either before or after statutory management.

But Qantas said last night: "We've had no discussions on taking a stake in Air NZ at this stage."

Helen Clark said the September 13 package, which would see the two big shareholders inject $300 million in equity and the Government lend $550 million, had been the first focus.

"But it's obvious to everyone who has looked at the issue that statutory management is a viable option. It hasn't been the first option followed but it is an option which we are fortunate to have in our law because it does enable a viable company to trade its way through," she said.

"It is not receivership, it is not liquidation. It is a viable path. It wasn't the first path chosen, but obviously no one is ruling it out. And a lot of commentators are saying the sooner the better."

Meanwhile, independently of these issues, the Government has agreed to indemnify Air NZ for up to $2 billion against acts of war and terrorism.

Finance Minister Michael Cullen said: "Insurance companies have withdrawn their war and terrorism cover, leaving all international airlines with no cover unless alternative means are found."

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