Ansett carve-up may end £35m outsource deal

The crisis at Ansett Holdings - the parent of Ansett Australia Airlines, which has gone into receivership - could leave a large...

The crisis at Ansett Holdings - the parent of Ansett Australia Airlines, which has gone into receivership - could leave a large dent in forward accounts for IBM Global Services Australia.

The airline's troubles have come to a head mid-way through at least one long-term outsourcing contract with IBM GSA.

In 1997 Ansett agreed to pay IBM GSA an estimated A$100m (£35m) to provide data centre services until 2007. The deal included mainframe and midframe computer services, data communications and systems software, but not database administration.

In a separate nine-year, multi-million-dollar pact, Ansett also turned over management of 6,000 desktop systems to IBM GSA. Under this arrangement IBM supplied personal computer repair, installation and maintenance services as well as LAN server support and help desk facilities. The contract was later transferred to another supplier when Air New Zealand took over Ansett.

With Ansett now facing dismemberment, so do those contracts. IBM GSA would not comment on the situation, but outsourcing industry executives said the company is likely to rank as just another unsecured creditor in terms of collecting any monies owed by Ansett.

While outsourcing contracts include provisions for termination if the customer goes into bankruptcy, there is little allowance for compensation claims. Normally, the outsourcer has invoiced in advance so there is money on its ledger that represents a liability.

In addition, the outsourcer has substantial obligations such as long-service leave and termination payments to staff working on the contract. In the case of Ansett, about 45 data centre personnel were involved when IBM GSA took over operations.

Based on the total value of its booked contracts - reportedly around £1bn - IBM GSA will also have factored in a risk percentage representing its exposure to unforeseen circumstances.

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