Mike Oliver: Airline jumps at shadows

We are told that Air New Zealand Engineering Services (ANZES) is only making a small profit. This may be true when compared with past performances, but the fact remains it is in profit. What sort of manager shuts down a business in profit? Isn't a small profit better than outsourcing work where the company has to pay? Isn't that a loss, or do I miss some basic accounting concept?

The customer airlines of ANZES compete on the same routes as Air New Zealand and make a profit. So why does Air NZ have a problem?

Workers at ANZES are paid on a six-tier pay scale with the top rate for a tradesman set at $20 an hour. The hire-out rate is $80 an hour.

Most engineers are paid much less than the top rate, and could find work at the local supermarket for a similar salary. So why do they want to continue working with ANZES?

They have a skill and wish to put it to good use. They have a dedication to ensure the national carrier is well maintained, giving themselves a sense of pride in their work and the satisfaction of knowing that passengers using the service are safe.

Some media claims have suggested there may be some employees at ANZES who receive $150,000 annually, but they would only be managers.

People on high earnings work long shifts and receive financial recompense in keeping with their hours of labour and skill.

The result of ANZES job cuts will be the loss of an important technological capability that may never return to New Zealand's shores.

Britain's railways learned this lesson. With British Rail's privatisation came engineering staff cuts.

After tragic accidents, the ensuing investigations found the rolling stock and track had been poorly maintained and dilapidated, causing general dysfunction, scheduling problems and eventually loss of life.

Britain's railways were not able to rectify this problem themselves and had to recruit engineering staff from Australia and elsewhere to train a new generation of engineering staff because they had lost all the expertise.

Some of Air NZ's competitors use ANZES for their maintenance needs, and at present ANZES is turning away work.

RNZAF transport aircraft have been sent to the US for routine maintenance when a well-equipped facility is available in Auckland. If this facility was not competitive would it be turning work away?

Air NZ and Qantas can boast only one casualty in 5 million departures. For this very reason, carriers with the cheapest fares often fly with empty seats when Air NZ is fully booked. Customers prefer to fly with a company that has a proven track record.

Where will this leave Air NZ when they outsource their maintenance to the lowest bidder? Auckland travel agents have quietly expressed concern as to whether they should recommend Air NZ in the future.

ANZES could be amalgamated into the airline to reduce administration staff, improve profitability and reduce unnecessary accounting procedures.

It is possible that the engineering departments need to have their working shifts reprogrammed to reduce penalty payments, but isn't this a management problem rather than a workforce problem? So why then are the engineering staff being targeted for the retrenchments?

ANZES is adding value to share holders. The order book is full until September 2006. Why is management jumping at shadows?

If there is a restructure required, let's get on with it, but don't shut down a viable business.

* Mike Oliver is an aircraft maintenance engineer with ANZES and has 30 years' experience working with aircraft.