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Ansett’s Poor Result:

Ansett Holdings Ltd has reported an after tax profit of just $3.4m for the 1995-96 financial year, although this somewhat artificially increased to $48.2m if unrealised foreign exchange gains are taken into account. The result compares with a $51.5m profit in 1994-95 and indicates a poor second half to the year after earnings of $9.6m in the first six months. Ansett made a small loss on a pre tax operating basis, much of this resulting from a notable loss of market share to Qantas on the Australian domestic market. The airline plans to undertake an extensive cost cutting exercise which will see at least $150m removed from an overall cost base of about $2.6bn. Possible areas to be looked at include pulling out of unprofitable routes and contracting out more services. TNT’s sale of its 50% share in Ansett to Air New Zealand for $325m will bring substantial benefits to all involved. TNT has just announced a disappointing net profit of $9.84m (after abnormals) for 1995-96, less than a quarter of that of the previous year and only one-tenth of the 1993-94 result. It has recently regarded its interest in Ansett as a “black spot” and a “huge distraction” and is happy to be rid of it along with other of its worldwide interests which have recently been sold.

Abnormals Keep Hazelton In Red:

Regional operator Hazelton Airlines has returned a net loss of $2.46m for the 1995-96 financial year after abnormals including a $5.2m writedown in the value of five Metro and Shorts 360 aircraft. This net result is very similar to the previous year’s loss which included an allowance for the ill fated and short lived Sydney/Geelong service and other items. More encouraging was the $1.51m pre tax operating profit, up 64% on the previous year. Operating revenues rose by 5.9% to $57.7m and passenger numbers increased by 6.6% to 392,000. Some observers are suggesting that Hazelton is ripe for takeover. There has already been a recent shift in ownership with WA charter operator Skippers Aviation purchasing Rothschild Australia’s 17.3% shareholding last July. Skippers purchased another package of shares in August, increasing its holding to 19.87%. Australian Aviation

Qantas Pay Deal Update:

Further to the item on the Qantas pay deal in Newsdesk this issue, it appears the deal will go ahead following further negotiations with the ACTU. In summary, the agreement covers an 8% pay increase over the next two years in exchange for productivity improvements. Employees will also be eligible for up to $1000 worth of Qantas shares. Negotiations with one of the airline’s unions, the Flight Attendants’ Association of Australia’s international division, were to be finalised at the time of writing with some specific changes to work practices still subject to discussion.

Qantas-Jal Codeshare:

Qantas and Japan Airlines have entered into a codesharing agreement on Australia/Japan services. From April next year Qantas will fly direct Boeing 747 services from Tokyo to Cairns and JAL to Brisbane instead of each operating daily flights on a composite route which includes both Queensland cities. The new arrangement will significantly reduce costs and is seen by observers as a possible precursor to JAL joining Qantas and British Airways as part of the latter’s global alliance. BA has been looking for an Asian airline to fill a gap in the alliance which includes Qantas, American Airlines and French operator TAT. It is believed that BA and JAL have already held talks on the subject.

Lockheed/Transfield Joint Venture:

Privately owned Australian company Transfield Defence Systems and Lockheed Martin are planning to form a joint venture company to bid for defence contracts in Australia and South East Asia. A Memorandum of Understanding has been signed under which the formation of the company — which will provide systems engineering and integration services — will be discussed. A prime target for the joint venture company is Project Wedgetail, to provide airborne early warning and control (AEW&C) capability for the RAAF (refer p24 July ’96 AA). Transfield is now Australia’s major shipbuilding company and is responsible for the Anzac frigate program.