Air NZ plunges on Ansett woes

One of the grounded Ansett jets

By CNN's Grant Holloway

AUCKLAND, New Zealand (CNN) -- Shares in airline Air New Zealand plunged Tuesday as the company tried to reassure investors its Australian subsidiary Ansett won't be closed down by safety authorities.

In the first day of trading since Australia's Civil Aviation Safety Authority (CASA) grounded 10 of Ansett's planes, Air New Zealand A shares (which can only be owned by the NZ public) closed 6 cents down at NZ95c, while the unrestricted B shares fell 8 cents to NZ$1.37.

QUOTE "It is still too soon to estimate reliably the daily costs being incurred by the disruption to services, but those costs are not expected to reach the lower end of the range suggested." - Sir Selwyn Cushing, chairman of Air New Zealand

Air New Zealand chairman Sir Selwyn Cushing issued a statement Tuesday morning saying he was confident CASA would not withdraw Ansett's operating certificates and that the authority's safety demands would be met.

He also said reports the cost to Air New Zealand of the groundings were running at between $1 million and $2.5 million (Australian $2 million to $5 million), were speculation and not based on figures supplied by the company.

ALSO Aviation official defends Ansett decision

"It is still too soon to estimate reliably the daily costs being incurred by the disruption to services, but those costs are not expected to reach the lower end of the range suggested," Cushing said.

AUDIO CNN's Kirsty Alfredson speaks to CASA's Peter Gibson. He says Ansett has to accept its shortcomings. 1.75 MB/2:47mins AIFF or WAV sound

He said the group's immediate focus was co-operating with CASA's investigation into the airline's safety and maintenance procedures to make sure the 10 grounded Boeing 767 planes are flying again as soon as possible.

Ansett's senior managers met in Melbourne, Australia Tuesday to discuss how the company meets CASA's demands and how to restore the airline's shattered public image.

Friday night deadline

CASA may still issue a notice on Friday night giving Ansett 14 days to justify why it should retain its air-worthiness operating certificates.

CASA said Monday Ansett would have to demonstrate how it will provide better leadership, training and resource support for their staff.

However Ansett CEO Gary Toomey said at a press conference on Tuesday afternoon that CASA had advised the airline it would not be necessary to issue the show-cause notice "if we are able to satisfy their requirements prior to midnight on Friday 20 April".

Toomey also said Ansett was pleased that CASA intended to commence inspections on the first 767s on Wednesday morning.

Earlier, Cushing said it was disappointing that Ansett's own advice to CASA "and the systemic improvement being achieved in the maintenance area" had not been sufficient to dissuade CASA from taking its action.

The crisis has brought forward plans by Air New Zealand to renew its aging fleet, with the grounded 767s, at up to 16 years old, some of the oldest models still flying.

"The present situation highlights the importance of fleet renewal plans for Ansett, which the board will consider in the near future," Cushing said.

Civil Aviation Safety Authority
Ansett
Air New Zealand

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