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Air NZ receives $76m ‘crash cash’

Posted by te2ataria on March 15, 2009

sent by a reader

$76m payout? Not bad for an aging flying coffin!

One interesting news item this week was the report of NZ$76m [USD40m] payout to Air New Zealand, [the world’s sub-aqua airline]

The first point of interest was age of the plane, only 2 years old according to New Zealand’s Herald on Sunday, which wrote:

Last month insurers for Air NZ – which owned the Airbus A320 but had leased it to the German airline XL Airways – paid out [only 😉 ] $76m on the two-year-old aircraft. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10561736

air-nz-plane-tail-lseen-in-the-sea
The tailfin of the doomed Air New Zealand A320 is seen floating in the Mediterranean Sea. Photo / AP/ via NZHerald. Image may be subject to copyright

Now,  EADS, the company that owns Airbus, the maker of the plane, had earlier reported that  the downed Air NZ plane was more than 4 years old in a press release:

Accident Near Perpignan, France – Media Information on A320 flight accident (Issue I) – Toulouse, 27  November  2008

Airbus regrets to confirm that an A320 operated by XL Airways Germany and owned by Air New Zealand was involved in an accident this afternoon. The aircraft was operating a flight from Perpignan, France with seven passengers on board.

The aircraft involved in the accident was MSN (Manufacturer Serial Number) 2500, delivered in July 2005. The aircraft had accumulated approximately 7000 flight hours in some 2800 flight cycles. It was powered by IAE V2500 engines. At this time no further factual information is available.  . . .
http://www.eads.com/1024/en/investor/News_and_Events/news_ir/2008/20081127_airbus_perpignan_a320.html

What’s the difference?

The residual value of the aircraft! If the doomed Air NZ plane was only 2 years old, it’s ‘re-sale’ value would have been about  80-90 percent of replacement cost of a new plane [about US$50m, depending on the cabin design and type of engine used.]

However, a 4 to 5-year-old Airbus A320 would be worth no more than about 60 – 70 percent of cost of the replacement, assuming average condition.

Here’s when things get more interesting

  • Cost of new Airbus A320-200:  ~ NZ$95m
  • “Re-sale” value of MSN2500 (the crashed aircraft) :  ~ 65% x NZ$95m [cost of new plane]  NZ$61.75m  [Say, NZ$62m ]
  • ‘Crash Cash’ received in settlement:  NZ$76m
  • Unexplained additional ‘bonus’ paid out by the insurers to Air NZ ~ NZ$14m [at this rate, Air NZ could make a fortune ditching all their planes in the Mediterranean sea.]

NZherald went on to say:

Whatever the amount, it is unlikely to approach the multi-million-dollar settlements traditionally awarded by American courts after air crashes.

You’d better believe it!

An Air NZ spokesman said the company had yet to decide if it would replace the Airbus.

It’d be very interesting to learn the outcome of their decision. The odds look like 14,000,000 to 1 against a replacement!

On the issue of compensation for the victims, NZHerald wrote:

But compensation for the families of the five New Zealanders who died – pilot Brian Horrell, 52, aircraft engineers Noel Marsh, 35, Michael Gyles, 49 and Murray White 37, and Civil Aviation Authority inspector Jeremy Cook, 58 – is likely to be a more complex issue.

Well, will they or won’t they? [The victims’ families hitting the jackpot.] That depends on a number of factors

  • Was is not pilot error that caused the Air NZ Airbus300 to crash, as France’s Bureau d’Enquetes et d’Analyses (BEA) suggested in their report?
  • Were the pilots poorly trained/ incompetent/ tired/ flying under the influence/etc?
  • Is Air NZ in the business of ripping off insurance companies, only to hand over the settlement cash to the victims’ families?
  • Did the ailing Air NZ sabotaged its own unneeded/ no longer viable to maintain aircraft for the insurance money?
  • Other factors not stated here.

NZHerald article is posted at: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10561736

[That said, Air new Zealand was ass-lucky not to have had any Israeli passengers on-board because they would have taken the airline to the cleaners! Moderator]

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2 Responses to “Air NZ receives $76m ‘crash cash’”

  1. te2ataria said

    Air NZ long haul passenger numbers down
    NZPA | Friday August 21 2009 – 04:27pm

    Passenger numbers are down as much as 24.2 percent on some Air New Zealand long haul routes as the swine flu outbreak put people off travelling.

    The airline carried 1.1 million passengers in July, down 8.4 percent on the same month last year. But capacity was reduced by 9.6 percent so the load factor only decreased by 3.2 percentage points.

    The airline said 86 percent of its domestic flights departed within 10 minutes of schedule departure time in July.

    Long haul passenger numbers decreased by 16.9 percent and capacity was reduced by 9.7 percent on the same month last year.

    Passenger numbers on Asian, Japanese, and UK routes were down 24.2 percent on last July and in response capacity was reduced by 16.2 percent.

    The airline combined flights from Osaka and Tokyo and used a Boeing 777-200 on the Hong Kong to London service.

    Group-wide yields for July were down 11.3 percent on the same month last year.

    Short haul and long haul yields were down by 13.1 percent and 11.9 percent respectively.

    Removing the impact of foreign exchange movements, group-wide yields were down 15.1 percent.

    Yields were higher last year partially due to fuel price related increases.

    Passenger numbers were also boosted last year by the World Youth Day, which took place in Sydney.
    http://www.nbr.co.nz/article/air-nz-long-haul-passenger-numbers-down-108802

  2. te2ataria said

    Air NZ seeks cartel gagging order repeal

    Thursday Aug 20, 2009
    By Grant Bradley

    Air New Zealand is seeking a precedent-setting ruling to overturn “draconian” gagging orders on staff imposed by the Commerce Commission during air freight cartel investigations.

    The airline’s lawyers yesterday argued it can’t defend itself against collusion accusations if it can’t talk to current or former staff about commission interviews.

    The commission started action against Air New Zealand and 12 other airlines late last year alleging cartel activity which the commission says could have cost customers $600 million.

    Air New Zealand is fighting those charges and in the meantime wants a stay of proceedings until secrecy orders imposed under Section 100 are discharged.

    In the High Court at Auckland Alan Galbraith, QC, said the blanket gagging orders were designed to protect third parties supplying information to the commission, not prevent employees talking to their company. Anyone breaching the orders, which cover both questions and answers during an interview, can face prosecution.

    Air New Zealand was entitled to full and frank information from employees in light of the “opaque” allegations against it, he said.

    Interviews of 13 staff had been conducted months ago, the statements had been sworn and, given the email trail, there was little prospect of history being rewritten.

    The orders prevented staff from giving the airline practical advice on how it could respond to the commission’s investigators. Once the investigation had moved to litigation the orders should be dropped, he said.

    The commission was using the “draconian” orders more often for tactical advantage rather than in the spirit in which they were intended.

    Galbraith said overuse of the orders was an issue that had been of considerable concern for the past five years.

    The orders exceeded powers given to police during criminal investigations and were also available to the Securities Commission.

    While business groups had supported their introduction in the 1980s, that was based on protection of third parties and the integrity of that evidence. Galbraith said there were freedom of expression issues under the Bill of Rights Act that could apply in this case.

    Three airlines were already seeking leniency deals by providing information to the commission, he said. Air New Zealand had also provided thousands of documents but along with most others facing action, was fighting the case.

    The commission is due to detail its response today.

    It has previously said Section 100 was important to prevent the targets of its cartel investigations tipping each other off as to the commission’s likely lines of inquiry following an interview.

    TOUGH LINE
    * Section 100 of the Commerce Act covers any information or document or evidence and applies to information given to and obtained by the Commerce Commission.
    * This month the commission said details of a cellphone pricing deal were covered by the section and it warned media against publishing them.
    * Fines for breaching the act range from $4000 to $12,000.
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10591911

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