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Old Feb 8, 02, 11:21 am
Join Date: Dec 2000
Location: Melbourne, Vic., Australia.
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Posts: 5,819
Ansett - the real story

Very worrying, if true...
(and sadly, not at all surprising)

Ansett ? the real story

ANSETT Mark II is bleeding at a rate of up to $500 million a year as ticket sales slump and income slows to a trickle.

Confidential Ansett documents seen by the Herald Sun show the airline is fighting desperately to stay in the air until the sale to Lindsay Fox and Solomon Lew is done.

But the documents raise very serious doubts whether the airline could survive for long even after the sale.

Last night, the Herald Sun learned Mr Fox and Mr Lew had sought an urgent meeting with Richard Branson -- the controller of Virgin Blue. That meeting was overnight Friday.

A daily traffic sheet shows only 3200 passengers flew with Ansett on Wednesday. They generated just $311,000 for the airline. Thursday was slightly better. Some 3860 passengers flew, generating $380,000 .

With costs of nearly $2 million a day to keep Ansett's planes in the air, the airline would lose nearly $42 million this month, if those figures continued.

That would be much worse than the $24 million predicted by Ansett's administrators as they try desperately to finalise the sale.

In an effort to stem the bleeding, the administrators have a secret plan to slash 46 flights next week -- with more to come.

But according to the documents, next week's cuts will save just $241,000 -- leaving the airline still running deeply and unsustainably in the red. Almost every figure in the documents paints an extremely bleak picture of Ansett's position.

Ticket sales -- as opposed to tickets actually used -- seem healthier, at around $600,000 a day.

But even those numbers would see the airline losing more than $1.2 million a day -- an annual rate of more than $400 million.

Much worse, most of these tickets are $88 bargain-basement Melbourne-Sydney flights, sold on the Internet.

On Wednesday, 6455 tickets were sold -- just 1045 by phone and the vast bulk, 5410, on the Web. The great majority of the tickets -- 4738 - were $88 fares.

The combination means Ansett is selling virtually none of the sorts of tickets necessary to build a sustainable airline.

Ansett's ticket profile is that of a low-rent Virgin -- and it would be losing at least $200 on each ticket. Plus they could evaporate overnight.

Forward sales look even worse. At the start of the week, according to the documents, Ansett had total bookings of 104,506.

This was barely half the pre-Christmas peak of more than 202,000. The forward booking numbers had been sliding all January.

Crucially, only 40,822 of these forward bookings were for flights in March or later.

While that might sound reasonably high, a detailed analysis showed that daily bookings for flights on or after March 1 averaged just 2064, for $207,000 of revenue.

Again, the overwhelming bulk of these -- 1543 tickets -- were $88 bargain basement ones.

There is no way administrators Mark Mentha and Mark Korda could keep the planes flying for much longer when Ansett is bleeding so much red ink.

Especially as virtually the only customers the airline now has are opportunistic buyers of cheap -- loss-generating -- Web tickets.

RichardMEL is offline