Everyone rallies to keep NZ flying

The Prime Minister leads a phalanx of businessmen and workers to try to avert disaster. FRAN O'SULLIVAN and ANGELA GREGORY report.

The Government and Air New Zealand have launched a giant hand-holding exercise to prevent the national flag carrier from being pushed to the wall.

Politicians, airline chiefs, business supporters and trade unions yesterday combined forces as "NZ Inc" to try to stem the negative Australian sentiment threatening the airline's future.

But the high-wire exercise seems likely to claim at least one casualty. The airline's chief executive, Gary Toomey, indicated last night that his career at Air New Zealand was probably over.

The "NZ Inc" hand-holding began after a successful plea by acting Air New Zealand chairman Jim Farmer to Prime Minister Helen Clark to call off her public criticism of the airline's directors and focus on retaining confidence in the airline.

The Prime Minister went on National Radio to praise Dr Farmer as a "loyal New Zealander who wants to see the airline succeed". Dr Farmer was enthusiastic in return when he later held his own press conference.

Confirmation that Canberra will push through emergency legislation to fund $500 million in employee entitlements for 16,000 Ansett workers has lessened fears that Air NZ may follow its Australian subsidiary into receivership.

Dr Farmer said Ansett's administrator ought to be able to fund the $500 million from the sale of its $3 billion assets.

"It is our best assessment that there is no reason why in due course these entitlements should not be paid out in full from Ansett assets."

The Ansett entitlements have to be quantified for the $850 million Air NZ bailout to be finalised.

The Australian Industrial Relations Commission will this week rule whether Air NZ is liable for the Ansett entitlements. But the airline is expected to contest any adverse finding.

The Kiwi damage control exercise came as the turmoil in international aviation markets reached a climax with US airlines calling for $US24 billion in aid from the Bush Administration to contain fallout from the terrorist attack.

US airline stocks took a hammering as Wall St reopened yesterday, but Air NZ shares firmed by 4c to 34c as the hand-holding exercise began.

Helen Clark said governments around the world might be forced to prop up airlines as they suffered the fallout from the terrorist attacks but "on the other hand everyone realises there has to be airlines".

"In a way, while that's bad for the airline industry, on the other hand it puts what's happening here in some context.

"Given the terrible effects of last week in the States we're not alone."

Despite the confidence-building, there is no way Air NZ - or its employees - can be insulated from the big downturn in the aviation industry.

The airline is looking at potential cutbacks or changes in services in the wake of the Ansett collapse and terrorist attacks.

"That's obviously part of the complications in putting our financials together for the due diligence," said Mr Toomey.

He said that at this stage he was not looking at staff cutbacks.

The international turmoil has sharply reduced job prospects for senior managers.

Mr Toomey - who left a top job as Qantas Airways chief financial officer to lead NZ's national flag carrier - confirmed that his own career "could be at an end".

But he would stay at the airline until its crisis was over and a new course set.

"Our number-one priority at the moment is to stabilise this business," Mr Toomey said.

Air NZ workers - backed by the Council of Trade Unions - called on Australian Prime Minister John Howard to show leadership and help to broker a transtasman solution over the Ansett workers' entitlements so breathing space could be created to allow Air NZ to recover.

CTU president Ross Wilson said it was considered time for Mr Howard to show some leadership in the airlines fiasco.

"He is hiding behind that country's union action, and the workers, and has let the situation between the countries develop without showing any leadership or taking initiative."

Mr Wilson said the unions saw responsibility for the problems as far broader than Air NZ's liability.

"The Howard Government has a responsibility because it created the airline market in Australia that led this situation to develop."

A well-orchestrated support operation fronted by Auckland Regional Chamber of Commerce head Michael Barnett and Business New Zealand chief Simon Carlaw also swung into action.

Air NZ released a fact sheet to underpin the importance of the national flag carrier to the New Zealand economy.

Mr Wilson, along with 60 union delegates, had a confidential session with Mr Toomey.

Delegates told him that the Air NZ staff were worried sick about their livelihoods which were on the line.

Said Mr Wilson afterwards: "It is absolutely vital in their interests and thousands of other jobs that we do keep this business on track."

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