Airlines Equipment (Loan Guarantee) Act 1981

The total guarantee cap is US$490 million across all such loans combined.

What conditions must be met before a guarantee is given?

The Treasurer must be satisfied that a number of protections are in place before signing off on any guarantee:

• The loan terms must be reasonable
• The aircraft and equipment must be used as security (collateral — meaning the government could claim them if things go wrong) for the Commonwealth
• The aircraft must be fully insured and kept insured at all times
• The aircraft cannot be sold or mortgaged in a way that puts another lender ahead of the Commonwealth
• The aircraft cannot be taken out of Australia without providing additional security approved by the Treasurer
• Government officers can inspect Ansett's financial records (and those of related entities) at any time if authorised by the relevant Minister
• Ansett must cover the government's legal costs associated with the guarantee
• Any other conditions the Treasurer considers necessary

Foreign courts and sovereign immunity: In an unusual but practical provision, the Treasurer can agree that legal disputes under the guarantee may be heard in overseas courts, and can even waive the Commonwealth's usual immunity from being sued in those foreign courts. This was likely necessary because some lenders (particularly US-based ones) would require disputes to be resolved in their home jurisdiction.

Delegation of powers: The Treasurer can delegate their powers under this Act (in writing) to an officer of the Department of the Treasury — except the power to delegate itself. Any action taken by that delegate counts as if the Treasurer did it personally.

Why does it matter? This Act was a direct government intervention to support the financial viability of Ansett at a time when Australian aviation was tightly regulated under a "two-airline policy" (a government-managed duopoly between Ansett and TAA). By guaranteeing major aircraft loans, the Commonwealth was essentially underwriting the modernisation of Ansett's domestic fleet, reducing the borrowing risk for lenders and making favourable loan terms accessible. If Ansett had defaulted, Australian taxpayers could have been left holding a bill of up to US$490 million.