Ansett - the real story
 

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

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Ansett ? the real story
By TERRY McCRANN
09feb02

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.

Just the type of news you need to help Ansett prosper. Doesn't matter whether it's true or not, a front page story like this in the country's biggest selling newspaper, is hardly going to do wonders for AN confidence.

The only solace I can find in the story is the fact that it's from the Herald Sun.

Cheers,

Justin

Who is trying to achieve what here? Here we have commercially sensitive information being plastered all over the front pages of national newspapers. Does QF offer extra special fares for whoever owns the Herald Sun (either News or PBL I think)? I don't get it.

Well,

News no longer has any vested interest in AN. Even after they sold out to NZ, they had some vested interest, as part of their payment was to take the form of NZ stock.

Cheers,

Justin

BTW: There is a rumour that McCrann has QF shares.

[This message has been edited by Skystar (edited 02-08-2002).]

What most of the newspapers are forgetting to mention is that F/L were also in London to meet with Airbus...

would be interesting to know which carrier they flew to LHR with?

virgin?, sq?, qf?????

Mark

i am truly loathing the press thru all this: the implication that people are turning AWAY actively from ansett when most people are actually under the impression the show has still to get on the road, really enrages me..

Given that News Ltd's cavalier (mis)management of Ansett until 1998 was a major factor in the airline's problems, for them to be pontificating like this now is frankly a bit bloody rich!

What I'm finding disturbing in all this is that Ansett is not doing much to counter all of this negative publicity, which is going to hurt ticket sales. People are already asking themselves if the tickets they bought to fly with Ansett are going to be safe for travel in 2 weeks. C'mon Ansett, give the public a bit of faith in you! Let us know what really is going on.

[This message has been edited by trentis (edited 02-09-2002).]

Following this story is a bit of "deja vu", and the press AnsettII is getting reads like what Canadian Airlines was receiving in its last six months. Certainly doesn't build confidence among potential ticket buyers.

After Air Canada finally bought CP, the airline continued to operate as a separate carrier for over six months, but bookings dropped off, I suspect because the media had by then convinced Canadians that the airline no longer existed.

One could see few crowds at the CP check-in counters or on flights -- most of us CP elites stuck with it to the very last days of separate flight numbers -- while AC was a zoo with overbooked flights, overcrowded check-in positions, and res lines that were flooded.

Perception of a company in the media is everything, unfortunately.

A decade ago [er, the 80s] when I did a lot of travel in Australia, I even became a member of the Golden Wing Club, and used ANSETT as my carrier of choice. Hope AN pulls through, merges with Virgin, and gets back on its feet.

AN have put a notice on their website reaffirming that tix are cashed backed and thus funds will be returned if there is a problem, but that's about it. I assume the administrators would claim advertising is costly and out of their scope (though how many AN banners have you noticed on news websites over the past month or so? I've seen LOTS! and they don't just get there for nothing).

I think the real culprit here is TESNA. Yes, Hogans Heroes. Perhaps Hogan really isn't running things, but Col. Klink is at the reigns, or they've left Shultz on duty...

Seriously, Tesna is doing little to help the situation. They announce very little (WHERE THE F*@)*#@ IS THE FF DETAILS?!?!). The general public don't _care_ about the SYD terminal lease, and only remember stories like the CBR lockout to DJ, and all the rest.

If you believe James Nixon at ANStars, Hogan is a bit of a legend and Tesna will win - well that's great, but what do they win? the right to spend $$$ flying around empty planes where the only pax are the $77 cheapies (like my brother next week!)?

big sigh.

------------------
RichardMEL, UA 1K
A Star Alliance Member.

McCrann managed to look at the slowest days in the slowest month and imply that this reflected the average day at AN. This is totally false.

Flights have not been slashed as McCrann indicates (only a few cancellations). The schedule as written by Andersens is continuing however the FLEW schedule did not kick in as advertised as a result of the sale being delayed. More rubbish dished by the Herald Sun.

If people are concerned about blowing their dough at AN then thats too bad, but dont spend your hard earned cash at DJ as things there are no better. DJ are suffering, but unlike AN, have no investor waiting in the wings.

As a pilot with AN I have a reasonable understanding of the issues being reported in the press. They are generally innacurate and often totally false, and have been for years (The easter debacle was awfully fabricated)

Patience will see AN become a viable business competitor to the red monolith but only if pax support us. Otherwise, be prepared to pay top dollar at the only gig in town.

Ansett Dude - welcome to the Ansett forum! It's great to have an employee in the forum, and will hopefully do a bit to boost morale around here http://www.flyertalk.com/forum/biggrin.gif


(woops - posted wrong name before!)

[This message has been edited by trentis (edited 02-13-2002).]

I have stolen this from "Ryanair" of the A.net forum - I apologise if you ever read this, but I think it's worthy of posting in this forum!
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"Anybody here know until last week the biggest loss in airline history was Co in 1992? Now they are the only US major expecting to make a profit. Anybody know who backed the rescue and whose on their board????

Anybody here heard of Ryanair? Isn't it amazing how an airline I can remember with a couple of Romanian planes and a handful of flights, managed to change huge losses to huge profits, while experiencing rapid growth achieving a larger market capitalisation than most of the worlds major airlines (including BA and QF?) and setting up bases in four countries in only five years. Anybody here know whose on the board of Ryanair and where the money came from????

I now bring you to Tesna, anybody want to guess where the money came from and whose on the board????

I'll give a clue, the answers the same each time."

This is why the press should just shutup for a couple of weeks until the last shot is fired. AN under administration is a totally different beast to what it will become with finance/expertise from Bonderman and Franke.

Ryanair's success is largely owing to its employment of the latest and greatest yield management software (and tight cost control of course) - rumoured to be used soon at AN.

It aint over by a long shot.