Branson looking at Ansett assets


Richard Branson says he is looking at Ansett assets for his Virgin Blue airline

CNN's Geoff Hiscock
Asia business editor

SYDNEY, Australia (CNN) -- Aviation entrepreneur Sir Richard Branson has confirmed he is looking at assets of the failed Australian airline Ansett for his Virgin Blue operation.

But Branson said Virgin Blue's success rested on its low cost base, and he would not take on staff or buy Ansett assets if it pushed up costs too much.

Branson told Australia's Nine television network on Friday there were possibly up to 1000 jobs with Virgin Blue, which now has entrenched its position as the second carrier in Australia.

It began flying a one-class discount service in late 2000.

With Ansett to end flights from next Monday, the dominant Australian carrier Qantas will have a monopoly on two-class full-service operations. It already has almost 80 percent of the total domestic market.

Branson said Virgin Blue airline would talk to Ansett's administrators in the next few days to assess if there were assets worth buying.

Deal collapsed


Ansett staff will be out of work after the airline makes its last flights Monday night

A deal by the Melbourne-based Tesna consortium to take over Ansett collapsed earlier this week, dashing the employment hopes of 3000 former Ansett staff.

Ansett, which was put into voluntary administration by its parent Air New Zealand last Sepember, was once Australia's second largest domestic carrier behind Qantas.

But financial problems, safety and maintenance concerns over its aging fleet, the economic downturn and aggressive competition from Qantas and Branson's discount carrier Virgin Blue eroded Ansett's position during 2001.

Since September, it has been flying in a much-reduced form while the administrators readied it for a sale to Tesna, the consortium set up by Melbourne businessmen Solomon Lew and Lindsay Fox.

Lew and Fox had agreed on November 8 to buy Ansett's mainline business for $267 million in cash and employee entitlements. They also pledged to bring in new Airbus aircraft to rejuvenate the Ansett fleet.

Third-party issues

But late on Tuesday night, Tesna served notice it was pulling out of the deal, saying that it had "reluctantly reached the conclusion the sale agreement is not capable of completion, and that the process involving Tesna and the administrators cease".

Tesna initially blamed third-party issues related to non-delivery of airport leases and aircraft.

But on Thursday Fox also blamed the Australian government, saying there had been no support from the conservative Liberal-National coalition because Tesna was regarded as being allied with the unions.

Australian deputy prime minister and transport minister John Anderson immediately rejected Fox's claim, telling CNN that the government had "cleared the decks" for the Tesna deal to go through.

"We cleared all the regulatory hurdles," he said.

Anderson said the negotiations had been about "commercial issues" not regulatory ones.

Australia's corporate regulator, the Australian Securities and Investments Commission, said Friday there was "no realistic prospect" for successfully prosecuting the directors of Ansett for breach of duties or insolvent trading.

The commission, which began an investigation into Ansett's collapse on the day it was put into administration, September 14, said its attention was now focused on the adequacy of disclosures made to the market by Ansett's parent Air New Zealand before September 12, 2001.

It said it hoped to make a final decision by May 31.