The Australian government will pay full entitlements to the employees of failed domestic airline Ansett if parent company Air New Zealand refuses, Australia’s Prime Minister Mr John Howard said today.
However, he has refused to give taxpayers’ money to keep the airline flying.
Thousands of air travellers were left stranded at airports in Australia and New Zealand by the sudden collapse of Australia's second-biggest airline.
Mr Howard saud paying to keep the airline going for even a couple of weeks could cost up to $1 billion, and he says that would be "monumentally irresponsible".
He said that although there will be a cap on any redundancy payments, the other entitlements such as salary, holiday pay and long-service leave will be paid.
Australia's corporate watchdog has begun an investigation into Ansett's collapse.
The Australian Securities and Investments Commission is examining whether the directors of Ansett's parent company, Air New Zealand, breached their legal duties.
The commission is investigating the potential liability of Air New Zealand under insolvent trading laws and is keen to examine the adequacy of financial disclosures made by the company.
Air New Zealand shares were today suspended from trade on the Australian Stock Exchange. They last traded at 59 cents.
In another development, ratings agency Standard and Poor's has downgraded Air New Zealand's long-term credit rating.