Australia's airlines: A shambles of greed and mismanagement

by Peter Mac

As we reported in last week's "Guardian", the Fox-Lew deal to rescue Ansett 
Airlines and salvage its former employees' entitlements, is hanging by a 
thread which gets more slender with each passing day.

This is how the last week's negotiations went:

Friday 1st February: Talks still proceeding; Sydney Airport Corporation 
Limited (SACL) still demanding multi-million dollar bond for reuse of 
Ansett facilities. Fox and Lew in America hunting for new aircraft. Acting 
P M John Anderson intervenes to persuade Fox-Lew not to take legal action 
against Sydney Airport Corporation over delays in getting company's deal 
accepted. The deal on leasing terminal facilities "could take place today", 
it is said.

Monday 4th: With talks still proceeding; the administrators state that 
agreement on the leasing of airport facilities "could be confirmed later 
this week".

The administrators state that "good progress has been made", but there is 
as yet no resolution about deals on the use of information technology 
systems, and on leasing facilities at Brisbane, Canberra, Melbourne or 
Perth airports.

(Meanwhile, Qantas management, which earlier demanded a wage freeze from 
its employees, is playing it tough and arrogant by standing down 
maintenance staff who refuse to work grueling new overtime schedules. With 
little domestic competition from Ansett, it knows that if industrial action 
affects flights, many passengers will be forced to simply rebook on later 
flights.)

Tuesday 5th: Ansett administrators moved to extend the trading period until 
the end of the month. If Ansett can continue trading, it can be sold at a 
higher price as a going concern. However, the company can only offer a 
minimum service, and is said to be losing some $6 million per week. With 
employees the primary unsecured creditors, this money will inevitably come 
at the expense of employee entitlements, and airline unions are opposing 
the move to extend trading.

Wednesday 6th: The administrators seek court protection from future legal 
action by creditors (including the employees) over the administrators' 
proposals to prolong the operations of the airline, with a view to 
maximising its price as a "going concern"

They also reveal that their agreement with Fox and Lew is only tentative 
and is reviewed each week, that US financial backers may pull out, and that 
the deal to purchase United Airlines planes has fallen through and Airbus 
Industries has been approached to fill the gap. 

Fox and Lew have still not nominated a subsidiary company to run the Ansett 
terminal facilities, but they say agreement with the airport authorities 
over leasing arrangements is to be signed that day, and that the total deal 
should be wrapped up "within 10 to 12 days".

However, they also warn that interested "third parties" may try to derail 
the Fox-Lew deal. Former Patricks Stevedoring boss Chris Corrigan discloses 
that his company Langcorp has a "monitoring interest" in Ansett's terminals 
and maintenance infrastructure if the company does not prove viable.

Thursday 7th: Fox and Lew revise their estimate of the numbers of former 
Ansett staff to be re employed by Tesna as 3000, a fall of 500. Such a move 
would eat heavily into the funds set aside as superannuation for the 
employees.

ACTU Secretary Greg Combet warns that the unions will take court action to 
ensure that the conditions of the sale as previously agreed are retained. 
However, the figure of further job losses is later revised to 1000 
positions, which would raise the claim for worker entitlements by $61 
million.

Meanwhile, the administrators have still not reached an agreement with 
airport authorities over the leasing of airport facilities, and the 
Australian Securities and Investments Commission intervened in the court 
action over the operation of the airline at a loss, claiming that to do so 
would put at risk the final pay out to the airline's unsecured creditors.

Friday 8th: Lew and Fox fly to the US again to shore up the financial 
backing for the deal. They deny the deal is "unraveling". They and the 
administrators still speak confidently about progress in negotiations over 
leasing of terminal facilities.

The Federal Government should intervene to bring about a quick settlement, 
preferably nationalise the airline but federal Treasurer Peter Costello 
indicates that the government is unwilling to give the airline any more 
support.

As we go to press, the Federal Government continues to stonewall over 
requests for assistance to the bankrupt company Ansett Airlines. The 
Government is standing by its statement from Acting Prime Minister John 
Anderson that the government had no intention of contributing to the deal, 
and that the situation was "no concern of the government". Meanwhile, the 
hopes of Ansett workers are fading with each passing day.