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