Ansett planes set to fly again

Ansett chief executive Gary Toomey leaves a meeting with CASA on Wednesday

In this story: Safety reform package submitted Singapore stake under discussion Aggressive price competition to continue RELATED SITES

By CNN's Grant Holloway

MELBOURNE, Australia (CNN) -- Australia's second largest airline, Ansett, hopes to have the first of its grounded aircraft flying again soon as the key safety authority completes its physical inspections of the planes.

Ansett chief executive officer Gary Toomey told CNN he understood Australia's Civil Aviation Safety Authority (CASA) had finished most of its checks on the first of the 767s and it was now up to them to clear the plane for flight.

However CASA said Thursday the planes would not be given clearance to fly until at least Friday.

The physical inspection of the grounded 767s began Wednesday afternoon and CASA says it will take at least a day and a half.

Last Thursday, CASA grounded 10 of Ansett's 767 planes citing safety and maintenance concerns. The authority also said it would issue Ansett with a notice Friday to "show cause" why it should be allowed to retain its operating certificates.

Toomey, who had meetings with Australia's Transport Minister John Anderson and CASA's chief safety official Mick Toller Wednesday, suggested the notice may now not be issued.

Safety reform package submitted

Ansett has submitted to CASA a series of safety and maintenance reforms. Radio reports Thursday say CASA has viewed the reforms favorably.

Toomey said the situation was now at a stage where both sides agree Ansett was capable of providing CASA with enough information for it to withdraw the "show cause" notice.

"That should be something we can achieve," he said.

The key to Ansett avoiding the notice is its reform proposals which include an overhaul of safety and maintenance procedures and extensive fleet upgrade program.

Ansett is fully owned by Air New Zealand, which is itself 25 percent owned by Singapore Airlines. Singapore Airlines is restricted by New Zealand government regulation from lifting its stake in Air New Zealand from 25 percent.

Singapore stake under discussion

A grounded Ansett 767

Air New Zealand wants the New Zealand Government to lift this restriction to enable Singapore Airlines to inject fresh capital into the airline to help fund the fleet improvements.

Some of the grounded 767s are up to 16 years old, and the fleet upgrade could cost up to $2.5 billion ($NZ 6 billion).

Toomey said he would be meeting with New Zealand Prime Minister Helen Clark "at her earliest convenience" to discuss the issue.

But if the government is unbending, Toomey said the fleet upgrade could be achieved by leasing additional aircraft and by arranging long-term and mezzanine finance.

However Air New Zealand's priority would be improving Ansett's operating cash flow.

Given the public relations nightmare of the groundings and continuing cut-throat competition in Australia's domestic airline market following deregulation of the industry last year, Ansett has the job ahead of it to bolster its balance sheet.

Aggressive price competition to continue

Toomey said Ansett would continue to aggressively compete on the price side and that, by and large, Ansett's corporate customers and the public had stuck by the airline.

"Our booking intake is actually up 1 percent for the next month," he said.

He said the cash flow improvements would come from leveraging efficiencies and cost cutting which had yet to be pursued from the merging of the two airlines, but he stressed there would not be cuts to the maintenance and engineering side.

In other developments Thursday, CASA responded to the leaking of a draft internal audit report suggesting the authority's powers to monitor safety in Australia had been eroded.

CASA said the report had not been finalized and had never been presented to CASA's director nor its board.

"CASA does not believe the report is robust as it lacks a professional approach," CASA said in a statement Thursday.

Ansett Australia
Civil Aviation Safety Authority

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