Australians shocked by airline clean-out

By DANIEL RIORDAN

Air New Zealand has taken the knife to Ansett Australia's top brass, including only two Ansett executives in its 21-person management structure for the combined airline group.

While Air NZ had been expected to assert its dominance over its recently acquired subsidiary, the severity of the clean-out still shocked Australians used to corporate dominance flowing the other way across the Tasman.

The combined Air New Zealand-Ansett is still looking for a chief executive, with a decision several weeks away at the earliest. The replacement for Jim McCrea, who left suddenly a month ago, will still be based in Auckland.

News of the Kiwi dominance did not go down well in Australia.

Analysts there have been generally sceptical about the value Air NZ can bring to Ansett Australia, and took a predictably dim view of the clean-out.

One analyst, who asked not to be named, said the company had lost some high-calibre staff among the Ansett departures.

Jason Smith, of Salomon Smith Barney in Sydney, said the decision to combine the airlines rather than keep separate management structures would reduce cost structures, but was disappointing from the perspective of Australian regulatory structure.

Iain Lang, federal president of the Australian Licensed Aircraft Engineers Association, which represents 750 Ansett staff, said it was too early to tell what impact the new management might have on his members. But he took comfort in Australian Foreign Investment Review Board requirements that Ansett Australia's headquarters remain in Australia and that there be no reduction of skilled staff due to management strategy.

Rex Jones, industrial officer with the New Zealand Engineers Union, said confirmation that the company would be run from this side of the Tasman was reassuring for his 2000 members in Air NZ.

Decisions on further restructuring down the chain of command are expected to be made by the new management team within the next few months.

Air NZ executive chairman Sir Selwyn Cushing announced the changes from Ansett head office in Melbourne.

The biggest casualty is interim Ansett Australia chief executive Craig Wallace, who was Ansett's commercial planning head before stepping up to the top job when Rod Eddington left to head British Airways.

Mr Wallace is one of five top Ansett Australia executives, including chief financial officer David Irvine, who have announced they are leaving the combined group.

Andrew Miller, previously head of Air NZ Domestic, will move from Auckland to Melbourne to replace Mr Wallace.

Sir Selwyn said there would be further announcements on the plans of other Ansett executives.

The combined group's new operational structure, which takes effect from Monday, comprises three coordinating core units and special purpose business units.

The group will be run from Auckland's "corporate centre," which will provide strategic leadership and shared corporate and administrative services.

A commercial and operational core will manage the group's commercial, technical and operational policies and activities.

It will be headed by Air NZ's commercial affairs manager, Allister Paterson, who is moving to Melbourne.

An Australasian business group will coordinate the activities of the group's three domestic airlines: Ansett Australia, Ansett's regional airlines in Australia and Air New Zealand's domestic operations. The head of that group has yet to be named.

Air New Zealand International and Ansett International will continue to operate as separate entities. Cargo and terminal services will join the group's ANNZES engineering services.

The two Australians left in top management will head Ansett International and Ansett's regional airlines in Australia.

The market expects Air NZ to hold off its rights issue to fund the purchase of Ansett Australia until a chief executive is in place.

Two top Air NZ executives are missing from the new management team: 40-year company veteran Graeme McDowall, the general manager international affairs, and 35-year veteran Ron Tannock, the general manager international operations.