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Why No Answers Before Decisions?

Monday, September 10 2001

ACT Commerce Spokesman Stephen Franks said today New Zealand taxpayers, New Zealand air travellers, Air New Zealand staff and Air New Zealand shareholders deserve answers to the questions ACT has been putting on their behalf before the government panics into a decision at last on Air New Zealand.

"No package promoted by the Board, which leaves in place BIL as a shareholder, should be approved until we know whether BIL has been the block on sensible earlier decisions.

"Has BIL blocked a cash issue because it didn't want to put in any more money but didn't want to lose what it thought was strategic negotiating advantage with Singapore Airlines?

"Has BIL been illegally wielding control influence? If so, why has it not been ejected from the share register?

"Does the "letter of comfort" or other guarantee arrangements for Ansett mean that fresh New Zealand money is just throwing good money after bad?

"What Board changes will be made given the total lack of confidence the market must now have in the current management?

"Why are the other questions I have been asking still unanswered?" Stephen Franks said.



07 September 2001

Hon Dr Michael Cullen
Minister of Finance
Parliament Buildings

Air New Zealand

I recognise that it is not always possible to deal with developing commercial matters openly.

I understand the pressures that will be facing you and your colleagues.

Nevertheless, I believe the months of government indecision over the possibility of a government bail out may have prolonged Air New Zealand's crisis. Judging from my past experience it could have let a shell shocked board clutch at the straw of eventual government rescue, to postpone taking sensible immediate action. Your replies early this week to my Parliamentary Questions concluded by saying, in effect, you did not propose to answer them.

Government members are happy to spend Parliamentary time asking yourselves and replying to patsy questions about pork barrel grants of trifling proportions, and negligible policy significance. Yet there have been no substantive responses to questions on a matter that could be bigger than any of the other business subsidy 'initiatives'.

Please provide answers to the following questions:

Will fresh money allow BIL to postpone the write off of its investment in a company it has managed to its knees?

Will the money be simply siphoned off to Australia to prop up Ansett?

If it is to prop up Ansett what assurance is there that it will not merely prolong loss leading competition to the benefit only of Australian passengers?

Why should the government create any risk by relaxing the foreign ownership condition if the money raised simply goes to Australia?

How do we know Ansett is salvageable under New Zealand management? This is not to denigrate Air New Zealand managers, but belligerent unions and colluding Australian politicians have driven out ambitious foreigners before now.

Will New Zealand management be allowed to reform Ansett work practices without creating an anti-foreigner backlash? Will Australian authorities suspend flying again, and give Ansett a dodgy reputation?

Was it dishonesty or just incompetence that seems to have left the Air New Zealand representatives on the Ansett board not knowing the true state of the business?

What assurance is there that anything will change?

Can Air New Zealand simply walk away from Ansett if necessary?

Has Air New Zealand guaranteed Ansett's debt?

Is any guarantee limited in time or amount or purpose?

Is any guarantee secured giving Australian creditors claims over Air New Zealand's essential New Zealand operating equipment?

If Air New Zealand has guaranteed Ansett debt, why?

What market research or other comfort have we that Australians will fly with an Ansett closely identified with New Zealand?

Do we know whether New Zealander's patriotic adverse reaction to the rebadging of Ansett New Zealand as "Qantas New Zealand" had anything to do with its low loadings, and if so why would Australians not treat Ansett Australia under New Zealand management the same or worse?

Has the Air New Zealand board and management been blocked from acting promptly by government dithering, or unlawful foreign control, pursuing a wider strategy aimed more at eventually inheriting Australian assets, than in New Zealand's interests?

If it was the latter, why were the government's Kiwi Share powers not used to kick out the shareholders exercising that influence?

I believe the position I have been raising in relation to Air New Zealand for months has been vindicated by events. I hope you have been driven to the conclusion that government should not step in while the effect would be to throw good money after bad. Can we help you make that absolutely clear to Brierley Investments, Singapore Airlines and the Air New Zealand Board?

Stephen Franks MP

ACT New Zealand

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