Ansett asset stripping denied by Air NZ

Air New Zealand Acting Chairman Dr Jim Farmer today refuted continuing Australian allegations that Air New Zealand had improperly removed cash and assets from Ansett Australia before calling in a Voluntary Administrator.

We have investigated each and every allegation, and they are completely without foundation.

"Why any thinking person would believe Air New Zealand would stoop to this sort of behaviour when at times during the past 12 months we have funded Ansett operating losses by as much as $A180 million is beyond my comprehension.

"Furthermore, the Administrator has confirmed to me that he has also been unable to find a shred of evidence of any of the alleged asset-stripping.

"For my part, I have told him that if any removal of Ansett's assets or Ansett payment of Air New Zealand's costs comes to light, Air New Zealand will naturally honour any legal obligation to make a compensating payment to Ansett".

Dr Farmer said that allegations of cash and asset stripping at Ansett appear to be nothing more than a smear campaign.

Dr Farmer said he was reluctant to dignify false asset-striping claims with detailed denials, but would comment on the three most significant allegations by way of example.

* ALLEGATION: Air New Zealand put $A200 million of its aviation fuel bills through Ansett's accounts.

FACTS: The two airlines bought fuel on a competitive tender basis from oil companies at various airports, combining their purchasing power to get the best prices, but each airline had a separate account and oil companies billed the airlines separately based on aircraft registration numbers which identified the correct airline to be billed beyond doubt.

* ALLEGATION: Air New Zealand grabbed Ansett jet engines and spares and flew them to New Zealand.

FACTS: Ansett leased a Canadian Boeing 767 which went to Air New Zealand's Christchurch engineering depot to be prepared for Ansett, since Ansett's engineering department was overloaded. The engines needed reconditioning. Air New Zealand replaced them with two fully reconditioned Air New Zealand engines to get the planes into the air, earning money for Ansett as quickly as possible. The original Canadian engines are being refurbished at Air Canada's expense and will be swapped for the Air New Zealand replacement engines shortly. Two other Air New Zealand engines are currently at the Ansett facilities in Melbourne - one is used by Ansett engineering in the recalibration of their engine test cell, the other is held in reserve to provide support for Air New Zealand's operations to Australia, or to assist any other operator needing support.

Arrangements to exchange engines and other rotable parts are usual - even among competing airlines - and were made in this instance to gain the best possible outcomes for both Air New Zealand and Ansett. Normal commercial terms applied to this exchange of services between the two legal entities.

* ALLEGATION: Air New Zealand improperly cleared out Ansett bank accounts in the last few weeks before a Voluntary Administrator was called in.

FACTS: Air New Zealand funded Ansett losses from the time it obtained a 100% shareholding in the company. The amounts advanced to Ansett by Air New Zealand fluctuated during the year as money was advanced to allow Ansett to make loan repayments and fund losses. Some repayments were made to Air New Zealand after Ansett refinanced unencumbered aircraft in its fleet. When Ansett went into voluntary administration on September 14 it still owed Air New Zealand more than $A80 million under the funding arrangements to cover its losses.

Dr Farmer said he understood there was considerable anger about the Ansett situation in Australia but urged an end to this smear campaign which had no factual basis.