Clashing styles led to airline exit, says Pero

Mike Pero

Mortgage broking millionaire Mike Pero has lifted the lid on his quick exit last year from the board of recently failed regional airline Origin Pacific, saying he had bitter clashes with founder Robert Inglis who refused to change its loss-making direction.

Pero said he had lost more than $3 million investing in the Nelson-based commuter airline and freight forwarder, which was forced to ground passenger services two weeks ago for want of a financial rescuer.

An Origin spokesman said the airline would issue an update for creditors today and was continuing to work on "a range of possible outcomes".

The private company's freight business is for sale. Its total debt is unknown.

Pero, an accomplished marketer who made his fortune building and selling Mike Pero Mortgages, said he first invested in Origin "substantially" in 2004 when it was in financial trouble.

"Certain representations were made to me that indicated [as a director] I would have some degree of influence and control, and that there were opportunities to change the airline.

"I and other investors, creditors and suppliers all believed there was a plan that was viable."

Pero said he wanted to revamp Origin's marketing, brand building and "change attitudes".

"They had good staff but none of them were utilised."

But he said very soon he was having "strong differences" with Inglis who was chairman, chief executive and 50 per cent shareholder.

"Within six months it was evident we needed to put more money in. Every single projection was wrong, I don't think a budget was ever achieved," Pero said.

"Robert is known for his single-mindedness. It was his way or no way. We had so many arguments around the table, I just couldn't handle it any more."

Pero quit last year, just short of 12 months after saying he would take a leading role in developing the struggling airline.

So why did he explain his exit at the time by saying he was confident Origin was again a "viable" business?

"I was so furious with what had happened, but if I'd gone to the media and said: 'I'm outta here because I don't want any part of it, it's all turning to crap', it would have nailed the coffin down," he said.

"I would have achieved nothing. I'd have just destroyed jobs and opportunities for everyone."

Origin employed around 260 staff. Pero believes around 20 have been retained to run the freight forwarding business, which leases Qantas aircraft.

Pero has said he wants to buy the freight business. The rider is that he wants to be chief executive.

But he claims to have had no contact with the company for more than 14 days and that his interest is dwindling because customers are disappearing to Air New Zealand and other competitors.

Publicly listed Freightways, a major freight customer, also wants to buy the freight business, and Origin has agreed to let it conduct due diligence.

Freightways chief executive Dean Bracewell could not be contacted for comment.

Origin declined to comment on Friday about progress.

Inglis this month told the Business Herald that passenger services were simply "suspended" and that the company needed a rescue package of around $7 million to compete profitably against state-owned Air New Zealand, which he has accused of predatory practices.

Yesterday an Origin spokesman said the company was "surprised and disappointed" at Pero's comments.

"The company has confidentiality agreements which allow him to undertake due diligence in the company's freight operations. Origin Pacific intends to continue to respect those confidentiality arrangements."

Pero claimed Origin's creditors, including those from its near bankruptcy in 2004, would fill "several pages" and that "tens of millions" of dollars had been lost.

Asked what had happened to Origin's leased fleet of 30-seater regional aircraft, an Origin spokesman said the aircraft "remained in New Zealand". He would not elaborate.

Pero dismissed Inglis' claim that Origin had nosedived because of Air New Zealand predatory practices.

Rising fuel prices, competitive pressures and the management style had all contributed, he said.