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Home / Business / Companies / Airlines

<i>The Interview:</i> Nathan Agnew

Liam Dann
By Liam Dann
Business Editor at Large·
10 Aug, 2007 05:00 PM7 mins to read

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Nathan Agnew was attracted to Air NZ by its fast-paced culture. Photo / Kenny Rodger

Nathan Agnew was attracted to Air NZ by its fast-paced culture. Photo / Kenny Rodger

KEY POINTS:

Nathan Agnew's colleagues at Air New Zealand describe him as an adrenaline junkie.

In his spare time, the airline's general manager of strategic development is either flying planes or he's jumping out of them.

Then when he heads back to work on Monday he's buying them, or rather,
he's telling chief executive Rob Fyfe and the board of directors that they need to buy them.

Which sounds a bit like the corporate equivalent of an extreme sport.

Agnew, 38, is the man responsible for most of Air NZ's $2.6 billion spend-up on new aircraft. He's also responsible for the decision to scrap the ubiquitous 747 by 2012.

It is a radical move considering those planes have dominated long-haul flying for the past 20 years.

Just as well Agnew has a head for heights.

In 10 months since he joined Air NZ the national carrier has doubled its firm orders for the flash new Boeing 787 Dreamliner (from four to eight) and doubled its options to buy even more. And just last week the airline announced it was buying four new 777-300s, worth more than $1 billion. The 777 purchase will enable the less fuel-efficient 747s to be sold off.

"There are very few airlines of our size that have been able to react as well to how quickly the aircraft supply cycle has changed," Agnew says.

Speed is the essence at Air NZ these days where chief executive Rob Fyfe's strategy is all about using the carrier's smaller size to its advantage.

The strategy has impressed aviation analysts and sent the airline's share price soaring more than 100 per cent in the past 12 months.

It also impressed Agnew, who says he was attracted across the Tasman by the lean fast-paced culture Rob Fyfe has created.

Fast decision making means that while bigger airlines now find themselves constrained by delays to the Airbus A380 and bogged down in the backlog of orders at Boeing, Air NZ has its fleet structure for the next 10 years in place. It is well placed to cash in on the the cyclical upswing in the aviation sector.

"To illustrate," says Agnew. "In December, when we doubled up on our 787 order Boeing had sold about 300 787s. Boeing has now sold over 700 787s." So in six months they've sold three years' supply.

"If we had deferred our fleet decision by even six months we would now be materially disadvantaged."

Agnew baulks at the idea that those decisions were all his. But he and his team of 12 are responsible for crunching the numbers to work out how many planes Air New Zealand needs and when it should buy.

He didn't wake up one morning and decide to kill off the 747.

"I don't have many discussions where I walk in to Rob's [Fyfe] office and say: I just had this blinding flash of inspiration," he says. "Every one in the senior team could understand how 777 would fit in. By the time I engaged with Rob and the board we knew what price we would pay, we knew what delivery dates we could expect and that Boeing could deliver."

He describes himself as the "nexus" of the planning process.

But there is big pressure on him to make the right calls.

An airline's profits rise or fall on hitting the ratio of seats to passengers.

"If we are slightly over in terms of the number of aircraft we have to support the demand, we depress our profit. Conversely, if demand grows faster than we have planned and we don't have enough aircraft, we are spilling passengers to the competition," he says. "So the board and Rob place quite a high degree of trust in what we do."

If Agnew wasn't such a snappy dresser he might pass for an academic - the beard, the glasses, he looks smart.

And a lot of what he actually does is academic in nature. But he is one of those rare individuals who can do the maths and still chat in a way that lets you kid yourself that you are on his level when you discuss the big picture.

"I spend a lot of time thinking through macro-economic variables," he says when asked about the daily nature of his job. "Things like thinking through what is happening in China and what that means for the number of Chinese that are likely to visit New Zealand."

Strategy jobs always sound like the plum roles in the pantheon of executive hierarchy. Everyone's got a theory about how to make things work better and sitting around thinking about stuff sounds cushy.

But when Agnew says "thinking about things" - he really means calculating things.

He laughs at the idea that his days might be spent in a zen-like state of contemplation. "I wish it was just thinking," he says.

"But unfortunately, it's routed in some fairly complex economic models ... big equations."

The 747 decision, for example, had plenty lot of variables and involved months of number crunching.

But in in the end it came down to few big factors, he says.

The new 777s are 16 per cent more fuel efficient. They are smaller aircraft, which means on average planes will be slightly fuller. "That's a good outcome for us and allows us to serve destinations which would be difficult to serve with 747 size."

Air NZ has already hinted it expects to start flying direct to South America and further in to China and North America over the next few years.

"The third point is the environmental credentials," he says.

"Given our brand image is so tied in to the New Zealand brand image we want to be absolutely at the forefront of having environmentally friendly aircraft."

Agnew is passionate about the environment. He cares enough to have calculated his own carbon footprint. Through a combination of biking or running to work most days and offsetting his air travel with occasional car trips with investment in new tree planting, he is personally carbon negative, he says.

The climate change issue is a material one for Air NZ, which faces a potential backlash from carbon conscious European travellers.

Air NZ will run a two-pronged approach, he says.

It will tailor its marketing to let people know that if they want to travel to New Zealand, they can be sure they are doing it on the most environmentally sound aircraft available.

The airline will also have a voluntary carbon offset scheme. That allows passengers to pay a small surcharge which will be used by the airline to reduce carbon through reforestation or renewable energy.

The challenge for Air NZ, and the country in general, will always be to overcome the "tyranny of distance", Agnew says.

Given the link between the airline and New Zealand's tourism market, Agnew probably spends more time than is natural for an Australian, contemplating this country's place in the world. The high dollar and high fuel prices mean New Zealand isn't a cheap destination any more.

But he is positive about the future.

"New Zealand clearly has a high intrinsic attractiveness," he says. "It's not just scenic beauty but the way tourists interact with New Zealanders. As an outsider, I can say that New Zealanders are generally a pretty friendly bunch."


Nathan Agnew

Air New Zealand's general manager of strategic development

* Age: 38
* Home town: Perth, Australia
* Married
* Education: University of Western Australia, Bachelor of Commerce (First Class Honours, MBA at University of California, Los Angeles
* Career: 1993-2000 - Consultant with The Boston Consulting Group in Sydney, Melbourne, Los Angeles. Major client included Qantas. * 2000-2005 - Partner in a boutique corporate advisory firm. Clients included Ansett, international airports and rail operators.October 2006 - Joined Air New Zealand
* Hobbies: Holds a private pilot's licence and is an avid skydiver. Enjoys endurance sports and has completed five marathons and three Ironman triathlons.

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