Consortium fails to secure tax breaks as Virgin Blue threaten to make counter offer

Australian businessmen Lindsay Fox and Solomon Lew are pressing on with plans to take over Ansett operations by 31 January despite the government ruling out the conversion of a A$195 million ($102 million) loan for workers' entitlements to a one-off grant, and a possible looming counter-bid by Virgin Blue.

The consortium is negotiating a deal with Ansett's administrators to restart the airline, which was placed into voluntary administration in September, with plans based on increasing its fleet to 40 Airbus A320s within three months from start-up. A slimmed down version of Ansett was recently restarted by the administrators with the aim of operating 11 aircraft on prime routes. Planning is already in place for further aircraft acquisition, training and air operator certificate transfer.

Lew and Fox had also sought tax breaks, subsidies for development routes and tougher anti-competition rules as a condition of their bid. But transport minister John Anderson has reaffirmed the government's requirement that the Ansett administrators repay the $195 million advance. He says: "In broad terms in relation to the taxation arrangements that apply to aviation, you do it for all or you do it for none. You can't do one-off special taxation depreciation allowances for one sector of the aviation industry. It is not really a wise thing to start talking about handing vast amounts of taxpayers' money to commercial operations."

Nevertheless, Fox and Lew may get part of what they requested as, the country's competition and consumer watchdog has announced it is investigating allegations of anti-competitive behaviour in the domestic market with a view to developing new regulations.

Meanwhile, David Huttner, head of commercial activities at low-cost rival Virgin Blue, raised the prospect of a counter-bid for Ansett assets. "The minister's saying the Lew-Fox bid can go ahead if there are no hand-outs. There aren't any, so if they want to go ahead and we don't put in a better offer, good luck to them," he says.

Huttner played down reports that owner Richard Branson wants to sell 51% of Virgin Blue, and says there are around 12 interested parties with whom discussions have been held since they announced two months ago they were looking for an investor, ideally to takeup to 49%.

Source: Flight International