14 September 2001

Statement to the Australian media by Dr Michael Cullen

There is some anti-New Zealand sentiment emerging in the aftermath of the Ansett failure. Air New Zealand will no doubt account for its actions. I want to make it clear that actions – or more specifically alleged inaction – by the New Zealand government in no way contributed to the demise of Ansett.

The facts are relatively clear. On 19 June, Singapore Airlines and Air New Zealand entered into a memorandum of understanding that envisaged a share placement followed by a rights issue, designed to raise about $850 million of new equity.

As events have unfolded, it has become clear that that amount would not in the remotest sense have been sufficient to allow the group – with Ansett – to continue trading and to restructure along profitable lines.

That, though, is history. It is important to make two points.

Firstly, the April memorandum of understanding was not binding. The money would not have been put in without Directors agreeing and finalising a strategy and Singapore Airlines completing due diligence. It is now clear that process would have resulted in a radical review of Air New Zealand’s capital requirements.

Even if it had not, time was not on the side of a quick decision. Air New Zealand shareholders would have to have approved the new share issue. The Directors of the company would then have had to initiate an internal due diligence process, and issue a prospectus. Shareholders would then have been given time to decide on whether or not to take up their rights and subscribe to the extra shares.

The company, not the government, estimated that the earliest a rights issue could have been concluded was mid to late November.

The decisions taken this week have in fact speeded up, not delayed, a decision, and by a substantial two month margin.

The facts are that the problems go back a long way. They have been compounded by recent events, both in the wider economic environment and in the aviation industry. Activity on this side of the Tasman has not materially impacted on the viability of Ansett.

Dr Michael Cullen
New Zealand Finance Minister

ENDS

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