Rules ground Air New Zealand chief

By DANIEL RIORDAN

Air New Zealand's new chief executive, Gary Toomey, will earn most of his salary from incentives, but will have to wait until mid-December before he can start paying the rent.

The 45-year-old Australian, who until yesterday was deputy chief executive and chief financial officer at Qantas, will be forced to spend three months on the corporate sidelines under the terms of his resignation from Qantas.

"I'm on gardening leave," Mr Toomey confirmed from his Sydney home yesterday.

Air New Zealand executive chairman Sir Selwyn Cushing said he would continue to run the airline until Mr Toomey came on board.

"We want success and he will provide that. His knowledge of the Australian market will be of great value in bringing this company's fortunes around."

Although Sir Selwyn said Mr Toomey would not have any input before December, cynical industry players suggested Qantas would find it hard to block lines of communication from his home to Air New Zealand's head office.

Mr Toomey, who joined Qantas in December 1993, is no stranger to Air New Zealand. He was an alternate on the board when Qantas had a shareholding, and has been a key player for one of its toughest competitors.

Qantas responded to Mr Toomey's departure by naming co-deputy chief executive Geoff Dixon the successor to managing director James Strong, who will retire next year, and naming Peter Gregg as the new chief financial officer.

Air New Zealand A shares yesterday fell 2c to 191c and B shares were down 2c to 275c.

Stephen Walker, head of equities at New Zealand's biggest investor, AMP, welcomed the appointment.

"We've met him with his Qantas hat on. We were impressed with his knowledge of the company and the industry. He has a very good track record. I think he will be a very good leader of the business. His knowledge of the Australian domestic industry will be invaluable."

A chartered accountant, Mr Toomey was briefly the chief financial officer with Arnotts before the Qantas job.

Before that he held the same position for five years at domestic carrier Australia Airlines, before it was acquired by Qantas.

Sir Selwyn said Mr Toomey beat out two others from the final shortlist, one of them Cathay Pacific's director for corporate planning, Tony Tyler.

He would not name the third shortlist candidate, but said a sticking point with two of the four candidates on an earlier shortlist had been their unwillingness to accept the role of a new position in the revamped Air New Zealand/Ansett structure - that of executive general manager Australasia, who would stand between the chief executive and the operations of Ansett Domestic, the group's biggest business unit, and Air New Zealand Domestic and South Pacific.

Some of the candidates wanted direct communication and contact with the heads of those units, but Mr Toomey was prepared to work within the structure.

A decision on the executive general manager Australasia would be made by Mr Toomey and the board in December, said Sir Selwyn. Mr Toomey could not be named managing director - the role Jim McCrea played before his abrupt resignation two months ago - because he was an Australian citizen.

Under the airline's constitution, a majority of its directors must be New Zealand citizens. Adding Mr Toomey to the board would mean seven of the 14 directors were non-New Zealanders and infringe clause 28.4d of the constitution.

Sir Selwyn said that work on the company's integration plan with Ansett Australia was continuing apace.

The big gains would be in information technology, procurement, selling and distribution, and customer relations - not in wage reductions.

"There will be some wage reductions, but I don't envisage huge blood-letting."

Mr Toomey said he could not talk about specific issues due to the legal constraints imposed under the terms of his departure from Qantas.

But what sort of manager is he?

"Well, you hear different reports," said Mr Toomey. "The West Australian said the other day I was a nasty fellow. But I like to think I work in a team, and develop people's potential.

"At Qantas we tried to develop people's key performance indicators and a clear understanding of their responsibilities and accountabilities so they can be monitored, and then try and let them get on and manage.

"I think it's very important in a service industry that you allow people at the coalface to have the authority and flexibility to get on and deal with the customer. The old airlines years ago tended to be very centralised and bureaucratic.

"The good airlines today allow people to deal with customers because it is a service industry."

Mr Toomey planned to spend the next two weeks at the Olympic Games - but not in the Qantas or Ansett boxes.