BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Friday, 14 September, 2001, 16:12 GMT 17:12 UK
Protests as Australia airline fails
Ansett workers vent their anger at a rally in Melbourne
Ansett workers show their anger at a rally in Melbourne
Thousands of angry airline workers have held protests after the sudden collapse of Ansett, Australia's second biggest carrier.

After two days spent trying to put together an emergency rescue package, Ansett's administrators said the airline's huge debts meant it had to be shut down with immediate effect early on Friday morning.

Mass confusion is reigning, the civil aviation industry is in meltdown

Martin Foley, Australian Services Union

About 16,000 jobs could go at Ansett, which is owned by Air New Zealand, and Australian politicians says a further 45,000 jobs are threatened in support industries.

The closure has stranded tens of thousands of passengers at airports in Australia and New Zealand, and grounded Ansett's four regional units, which offer the only flights to many domestic destinations.

'Industry in meltdown'

Ansett workers in Melbourne blockaded an Air NZ plane carrying New Zealand Prime Minister Helen Clark.

Angry Ansett worker outside a closed terminal in Sydney
16,000 Ansett staff may lose their jobs

"Mass confusion is reigning, the civil aviation industry is in meltdown", said Martin Foley, vice president of the Australian Services Union (ASU) trade union in the state of Victoria.

Australian prime minister John Howard has rejected calls from the unions and the opposition Labour party for a rescue package.

Addressing fears about unpaid wages, holiday pay and other staff entitlements, Mr Howard said Air NZ had a "legal obligation" to meet these costs.

"There is no way that we can be expected as a government to bail out a company that got into difficulty through no fault of the government's," Mr Howard said after a Cabinet meeting.

Write off

Ansett has been hit hard by tough price competition, a weak currency and excessive costs fuelled by high energy prices.

Ansett... has been completely and comprehensively driven into the ground by its New Zealand owners. It is just mind-bogglingly bad and it just can not be resurrected in its current form

John Anderson, Australian deputy prime minister

"Unfortunately it (Ansett) could not be given away for a dollar," said Peter Hedge of PriceWaterhouseCoopers, the appointed administrator for Ansett during an Australian Broadcasting Corporation radio interview.

Air New Zealand (ANZ), which owns Ansett, had put the airline into voluntary administration on Wednesday after admitting it was losing A$1.3m (US$670,000; 460,000) a day.

ANZ has now written off all of its NZ$1.3bn (US$550m; 375m) investment in Ansett, which had 40% of Australia's A$10bn (US$5bn; 3.5bn) domestic air market.

Regulator holds inquiry

The meltdown is being investigated by the Australian Securities and Investments Commission, with a focus on possible breaches of duty by directors.

The commission said it was too early to say whether the airline had been trading while insolvent.

Ansett's old planes are in dire need of immediate maintenance, which would need to be followed up with a A$4bn (US$2bn, 1.42bn) cash injection to upgrade the fleet.


The immediate effect of Ansett's closure, which took effect at 0200 local time (1600 GMT on Thursday), was to strand passengers as check-ins were closed.

The action was against an Air New Zealand flight. It's a great big plane with Air New Zealand plastered all over it, and that obviously caused some angst

Spokesman for Helen Clark, New Zealand prime minister

About 45,000 passengers were thought to be stranded.

Ansett's larger rival, Qantas, offered free flights home for those caught en route, while newer budget competitor Virgin Blue offered discounts.

Both are expected to pick up parts of Ansett, probably at firesale prices.

Virgin Blue in particular is moving fast to try to pluck planes, crews and routes from Ansett's hulk.

Qantas earlier this week ditched plans to buy the airline, saying its financial troubles were too severe.

Another candidate is Singapore Airlines, which owns 25% of Ansett, although Australian authorities said Singapore was not showing much interest.

Sydney Airport on strike

With Ansett's 16,000 workers now facing redundancy, 4,000 union members at Sydney Airport in Australia called a wildcat strike, shutting down the airport for three hours.

"Qantas refuellers have stopped refuelling the planes, the baggage handlers are walking off the job as we speak, both international and domestic," said a Transport Workers' Union official.

Air New Zealand chairman Jim Farmer
Australia's government blames Air NZ for collapse

"They are demanding that the prime minister protect 100% of entitlements."

In Melbourne, Ansett workers held a rally in the city centre and some protestors blockaded Ms Clark's plane at the airport.

Ms Clark had to resort to a police helicopter to get out of the airport.

"It is a great big plane with Air New Zealand plastered all over it, and that obviously caused some angst," said a spokesman for Ms Clark.

Air NZ suspended check-in for passengers flying to Australia as a result of the strike and the blockade.

Air NZ has applied for a court injunction to prevent any more blockades, the Australian Associated Press reported.

Passing the buck

The Australian government said the collapse of "an Australian icon" was nothing to do with their handling of the situation, but the fault of an incompetent Air NZ.

"Ansett's assets will now be put up for sale, but the company itself has been completely and comprehensively driven into the ground by its New Zealand owners," said the Australian deputy prime minister and transport minister, John Anderson.

"It is just mind-bogglingly bad and it just can not be resurrected in its current form."

Michael Cullen, New Zealand's Finance Minister
"We are in a much worse potential position of the loss of our one nationwide domestic carrier"
The BBC's Red Harrison
"Thousands of trade unionists have rallied in protest"
See also:

12 Sep 01 | Business
Aussie airline rescue fails
11 Sep 01 | Business
Qantas poised for airline deal
06 Jun 01 | Business
Australia avoids recession
01 May 01 | Business
Airlines clash down under
09 Aug 01 | Business
Australian job losses on the rise
16 Aug 01 | Business
Qantas profits slump
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories