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Monday, 28 January, 2002, 11:00 GMT
Ansett sale tests creditors' resolve
Empty Star Alliance
Fellow members of the Star Alliance are losing out from Ansett's collapse
By Christian Mahne in Sydney

Creditors of Australia's bankrupt former number two airline Ansett meet in Melbourne on Tuesday to finalise the carrier's sale.

There is only one serious bid on the table, a $3bn Australian dollar (1.10bn; $1.55bn) offer from the Solomon Lew and Lindsay Fox backed Tesna consortium.

Ansett - key facts
Claims 5% of domestic market
Old firm employed 14,000 people
New firm employs 4,000
Administrators' costs: Au$10.8m
Administrators have spent 40 man years processing the collapse

Tesna - Ansett spelt backwards - will pay $270m Australian dollars (Au$) cash and Au$244m in employee entitlements up front, with the balance in the form of assumed liability.

That still leaves Ansett's 3 million creditors facing an Au$1.8bn shortfall.

Amongst the biggest losers are frequent flyers.

The 2.7 million members of Ansett's Gold Wing scheme have between them lost 70 billion points, valued at Au$140m.

As unsecured creditors, the administrators have warned they will be lucky to receive even Au$0.05 in the dollar.

Agent disappears

The most visible evidence of Ansett's collapse is in the High Street.

Traveland office
Traveland: Disappearing name

Traveland, owned by Ansett, was one of Australia's best known travel agencies.

Now the brand is set to disappear for good.

When the airline folded, Traveland owed agents $100m in unpaid commissions and refunds, Mike Hatton of the Australian Federation of Travel Agents said.

"Those people in the Traveland Group probably suffered the most, because of the publicity surrounding the name.

"About a third of the stores, 104, were owned directly by Ansett the airline.

"The other two thirds were franchisees and they were the ones who suffered the most because the name was pulled through the mud throughout this whole debacle."

Move to web

Ansett's collapse is helping drive a wholesale reorganisation of the travel sector.

In an effort to cut costs, the remaining airlines, Qantas and VirginBlue, are strongly backing internet sales.

VirginBlue now sells more than 60% of tickets direct to the public.

For airlines, the benefits are significant, they lose just 2% of the face price of the ticket in administration costs, compared with 10 times that for old-style paper tickets.

Partners lose out

The fallout from Ansett's collapse has reached far beyond Australia's shores.

About 4.8 million people visited Australia in 2001, a decrease of 2.6% over the year before.

Peter Harbison of the Centre for Asia-Pacific Aviation said that part of that reduction was due to the effect of Ansett's collapse on its former Star Alliance network partners.

"It's estimated that the Star Alliance carriers, because they don't have a carrier in Australia at the moment, are losing anywhere between US$25 and $50m a year by not having access to the market.

"In other words they're losing traffic at home and outbound by not having those linkages."

The total cumulative cost of the Ansett crisis is expected to knock three quarters of a percentage point off Australia's gross domestic product this year.

That will be enough to bring Australia's recent record of buoyant growth firmly down to earth.

Christian Mahne in Sydney
"Ansett Mark 2 will have to use damaging price wars to drive market share up."
Robert Gottliebson, Australian Financial Review
"Lindsay Fox is one of the largest transport operators in Australia"
See also:

08 Nov 01 | Business
Ansett finds a buyer
27 Sep 01 | Business
Ansett returns from bankruptcy
17 Sep 01 | Business
Ansett administrator quits
16 Sep 01 | Business
Ansett workers offered some hope
14 Sep 01 | Business
Protests as Australia airline fails
12 Sep 01 | Business
Aussie airline rescue fails
11 Sep 01 | Business
Qantas poised for airline deal
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