Airport chief shuns holding pattern

Simon Moutter wants stronger and more stable relationships between the airport and airlines. Photo / Brett Phibbs

A year ago the dust was settling at Auckland International Airport after two years of intense takeover activity that ultimately ended in the thwarted bid by a Canadian pension fund to buy a chunk of it.

The company was nearing the end of a $500 million five-year building spree and the falling trajectory of passenger numbers had yet to hit.

Chief executive Simon Moutter faces a whole new world.

The 48-year-old has been in the top job for just over six months; for the time being at least the company is out of corporate play, big capital expenditure has ended and airlines are struggling with some long-haul routes in particular looking shaky.

Then there's the company's own performance. At an investors' day last week, Moutter was upfront about where the airport was lagging; flat profitability because of the cost drag of capital spending, passenger growth below international trends, shops off the pace, property development activity slow and relationships with airlines that "could well be stronger".

In what he acknowledged were plans lacking detail, he said the company would now make sure every dollar of capex was justified, invest "carefully" in retail and property, apply resource to route retention, tourism and cargo. In the longer term spending on the airfield would return when passenger numbers bumped up and there could be spending on non-traditional ventures or businesses off-site.

Moutter said given such a big transformation at Mangere with six new faces in the leadership group, it was time to expose some thinking.

"In my first few weeks I went round every significant investor and got them to tell me what they thought the company should be doing - that was very divergent."

The company was effectively ring-fenced by the last government and its wide shareholding including plenty of Mums and Dads and Auckland and Manukau city councils means that not much is going to change in a hurry, which provides some comfort for Moutter.

He wasn't around at the time but takeover activity had taken its toll.

"When you've got that going on for the best part of two years it's very hard to apply your mind to the core activities of business. The distraction impact of that is enormous."

Moutter believes it's important for the airport to achieve a stable commercial ownership, doesn't support constraints, welcomes the review of overseas investment criteria and points to ownership issues arising out of the proposed Auckland Super City.

"I don't think ownership of Auckland Airport is at the end of the journey but I'm enjoying the fact that it's not in play right now. We're not far enough along and ready for that at this point."

Moutter did an "apprenticeship" year at Telecom in 1999 after running Powerco.

"I made one of those very brave calls - I wanted to shift industry so from being a CEO I went to run network operations services at Telecom, a level below the executive team. I took the decision to drop a level and learn the business. That year of apprenticeship was tremendously important."

He went on to being chief operating officer, acting in the top job for three months between Theresa Gattung and Paul Reynolds.

"To be frank I was a bit worn out by the scale of Telecom. When you've got 7000 people all over the country you're on the phone all day whereas this is more about my Powerco days - you can get your arms around the business you can get to know all [300] people and front up directly."

The view of Telecom was "hugely perceptional - most people who formed a view based that on a story in the media. With the airport anyone can form a view themselves on whether it is a good one." So how is Moutter rating the job?

From the outside he's enjoying himself, he's working hard on finding out what his shareholders want and on learning the business, turning up at a Boeing briefing late last year usually only attended by journalists.

Inside one major investor, the view is positive.

"He's very focused on how to drive value. It's a very different style, much more inclusive although there'd be a steel fist beneath the glove," an executive said.

Now the big capital spendup is over, airlines are happier too. The Board of Airline Representatives' executive director, John Beckett, says there was poistive sentiment members. "At an operations level there's a lot of good things happening."

Veteran airline boss, David Figgins of Cathay Pacific, said he'd found Moutter's approach refreshing.

"He treats us as customers and wants to know how we can work better together."

Forsyth Barr analyst Jeremy Simpson said having Moutter there was a back to basics approach.

"He's enthused as you'd hope. He's got a very strong business, there's continuous scope to get back to the basics."

Another analyst said Moutter had come to the job with a reputation of being a tough manager of assets and costs but had probably now realised there was limited scope to trim, hence the lack of detail in the strategy outline.

"As they say they'll be 'fighting fit' but the proof will be in the pudding."

And while the food offering has copped flak from Herald readers recently, Moutter says the cargo operation is his least favourite part of the airport.

"When you look at how cargo is managed on the airport it looks inefficient, wasteful of space and out of date. It's tin can city out there, trolleys going down public roads, it just doesn't look right."

He said with a pause in passenger growth, now was the time to devote some more attention to cargo, which is running at 50 per cent of its potential.

Politicians, Maori groups, travellers, local authorities, government agencies - all have a stake in the airport, but it is the airline customers to whom Moutter devotes most of his energy, which he appears to have a fair amount.

"I've spent the lion's share of my time thinking about how we might get stronger and more stable relationships between the airport and airlines.

The airport has close to 30 different airline customers, all with strong views and how they see the airport charges playing into their own business models.

Moutter's keen over time to offer variable charges depending on where and when planes use the airport and graduated charges that grow over time to lower the barriers to new routes.

He says airline charging is rigid and traditional.

"If they [airlines] get clingy to the current model and force you back to the vanilla middle that's a bad outcome. I'd like to be the 'Yes Airport'; to say to airlines, 'Let's find a way to do what you want to do'."

Tighter regulation is hovering in the background although the airport doesn't like being lumped in with electricity lines companies.

"I don't fear regulation here - I think we will get to sensible outcomes around the disclosure regime. I don't spend as much time thinking about regulation as I did at Telecom over the last few years."

Moutter (whose surname came courtesy of his Geordie father) had a solid blue-collar upbringing in Palmerston North. He regards himself as a finisher. He's not prone to self-doubt and not reliant on people telling him whether he's done a good job.

He took the airport job, expecting to be there for four to five years although there is no fixed term. "If I start I finish, I'll do something and I'll hand it over done, not stirred up and after two years leave it for someone else."

SIMON MOUTTER

* Age 48.
* Trained engineer.

Previous roles

* Chief executive of gas and electricity business Powerco.
* Chief operating officer of Telecom.

Interests

* Trail bike riding with his children.
* Syndicate manager for racehorse Golan Star (which had a win in the 10th at Awapuni late last month).