Wanted: masochist for top Air NZ job

The search for someone to head Air NZ is nearly over. DANIEL RIORDAN looks at candidates.

A borderline masochist with airline management experience, the ability to nurse a balance sheet through intensive care, and an appreciation of the nuances of running a state-owned business.

These are just some of the attributes Air New Zealand's new chief executive will need.

The search for someone to fill the void left by Gary Toomey's resignation three months ago is understood to be at an advanced stage, although Air NZ is keeping quiet on progress.

The smart money still has airline senior executive Andrew Miller as frontrunner, with TVNZ head Rick Ellis as second favourite.

Mr Ellis has experienced the highs and lows of working with the Government.

He was hired by Jim Bolger's National Government to prepare the state broadcaster for sale, only for the incoming Labour Government to take that off the agenda.

He has airline experience, as chief executive of Ansett New Zealand and general manager of sales and marketing for Ansett Australia, and is leaving TVNZ in March.

He is said to retain his enthusiasm for the airline industry and was widely believed to be interested in the job that Gary Toomey was given a year ago.

Mr Miller is Air NZ's senior vice- president, and is responsible for strategy and planning.

Before half the senior management team was laid off after Ansett's demise, he held the same title with responsibility for sales and marketing, and before that he was in charge of Air NZ's domestic business.

A Scot who joined Air NZ in 1997, he is highly regarded within the company and the industry.

One industry insider describes him as "very decisive, with strong marketing talents and some financial orientation".

"He did a damn good job sorting out the domestic airline and he's no fool."

Another name mentioned before Christmas was Tony Marks, another former Air NZ sales and marketing head, now running kiwifruit marketer Zespri.

But the Business Herald understands Mr Marks, who has a background in airline management and is a New Zealander, is not a candidate.



One source said that after chairman John Palmer was appointed in late November he modified the chief executive's job description, which placed emphasis on New Zealand nationality and airline experience, and asked the Australian management search firm charged with the task to widen its job brief.

With so many airlines trimming staff, including top management, and some closing down, there should be no shortage of leading international candidates.

But a major impediment to attracting top international talent is that the salary offered is bound to be considerably below the roughly $2 million Mr Toomey is believed to have made.

Not only is the airline less than half the size it was, after Ansett was cut adrift, but the Government as the new major owner is unlikely to hand out a huge amount of money.



It is likely a million dollars will be at the top end of the salary range offered, which could make it difficult to attract top overseas candidates.

Also, with Air NZ now 82 per cent Government owned, the new chief executive will have to run the airline under difficult conditions.

Certain options - such as closing unprofitable provincial routes - probably will not be available, particularly in an election year.

Mr Palmer will no doubt handle most of the Government interaction, using his experience of corporate turnaround and restructuring from his time with the Kiwifruit Board.

Macquarie Equities senior investment adviser Arthur Lim says many potential candidates will have been scared off by the problems still confronting the airline and the industry's volatility.

There were also the restraints it will have to work under with the Government as the major shareholder.

"Even if you pay someone a million dollars, do they really want a job like Air NZ?

"The industry is still in a horrendous state of flux, you have staff morale issues to sort out, they're still talking about redundancies, there's still alliances they need to repair."

Mr Lim also says the successful candidate is going to have to earn his or her money.

"Whoever takes the job will be working seven days a week, 18 hours a day, for the first couple of years."

Another commentator points out the airline is in many ways in a similar position to where it was in the early 1990s, when it was effectively broke after the Gulf War.

The airline, then uncomfortably owned 25 per cent by Qantas, changed tack, forming alliances with United Airlines and Singapore Airlines and pinning its expansion on Ansett.

Today is very different.

"Singapore Airlines is now embarrassed and pissed off, Qantas is on the attack, and the future for Air NZ is now fairly bleak," says Mr Lim.

"It's back where it was 10 years ago, but dressed in rags rather than finery, and with an empty dancecard.

"How many international alliance partners would want to take on this challenge?

"The airline needs to shrink before it grows again.

"It needs to restore profitability on the Tasman and focus on the key routes to Los Angeles and Japan.

"And it must look for a partner strong on the Pacific and Tasman who hates Qantas."

The man warming the chief executive seat, executive director Roger France, gave a sombre message to shareholders before Christmas.

The industry was facing the worst trading conditions in memory, he said, and Air New Zealand was not insulated from this.

The Government-financed recapitalisation - $885 million ploughed in with another $150 million on tap - will give the company a platform for survival but not necessarily success.

It will create either career-ending or career-making conditions for the new chief executive.

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