The press conference was called to respond to claims by the Opposition National Party that the government dithered
Cullen’s opening comments: There is nothing in the papers you should be terribly surprised about. We received an
approach from Singapore with respect to lifting the cap. At that stage our advice from officials and the airline was
that there was not an immediate crisis and the timeline we were working towards was the proposed agm on September 4.
Qantas also had a bid in which was supported by the Australian government. The advice was that there were more
regulatory issues surrounding that than there were with the Singapore deal.
The advice with the Singapore deal was to pursue a national interest package around certain objectives. The Singapore
deal was of course contingent on a number of things happening in terms of approvals, rights issues and therefore some
process of diligence around that. There has never been the suggestion this was all going to be decided in one day and
the money appear miraculously in the bank the next day. That was not the context in which any approach was made by
anybody
What then happened around mid-August was that it became clear the whole package rested on assumptions in terms of money
which were no longer supportable, uncertainty about the role of Virgin Blue in the deal and indeed as I said last year
we and Air New Zealand discovered their situation was a good deal more serious than they had originally believed. As
that unfolded eventually Singapore moved away from participation and the government was left in the position of having
to recapitalise the airline
What unravelled was not the govt dithering. What unravelled was the whole deal which was put forward was not going to be
sufficient
Media: If you’d made the decision to go with Singapore…
Michael: It would still have unravelled. The money that was proposed to be put in was not going to be enough. Virgin
Blue was not going to be sold to Air New Zealand. Ansett was in bigger trouble than Air New Zealand had initially
realised. So the money would not have gone into the bank that would have led to Air New Zealand being secure, safe and
carrying on. That was not a viable or feasible scenario
Why did the govt agree to re-enter negotiations with Qantas in early August?
Because the Qantas offer was one which had to be considered seriously. We had an approach from the Australian govt. That
had to be considered seriously in terms of our relationship with Australia.
But you were told that there were too many regulatory problems, too many competition problems, and that it was an
insurmountable problem that Singapore would not sell
Michael: And not a great deal of time was spent on those negotiations compared with Singapore as the documents make
clear
How much time was spent considering statutory management?
Michael: Only in the later stages did that come to be seen as a possibility. The govt wasn’t ever keen on the idea but
it was an option we had to consider
The papers say Air New Zealand needs $1.7 b to keep itself going until next year…
Michael: If it held on to Ansett. The recapitalisation requirement in the scenario of Ansett being retained kept growing
till it reached that $1.7 billion, at one point you might recollect it was put at $1.5 to $2 billion. But now of course
Air New Zealand has moved toward some asset sales as part of the means of raising that capital
Ends