Air NZ CEO Details Tactics,Eyes Closer Singapore Air Ties
SYDNEY (Dow Jones)--Gary Toomey, the new chief executive of Air New Zealand Ltd. (A.AIZ), on Sunday outlined his strategy to lift the performance of the company's Ansett Australia unit, as well as fleet upgrade plans and an ambition to deepen the company's relationship with Singapore Airlines Ltd. (P.SAL).
Toomey, who stepped down as Qantas Airways Ltd. (A.QAN) deputy chief executive in September, said one of his first goals is to expand Ansett International's flights to key, high-yield destinations like Los Angeles and Tokyo in a bid to provide broader service for loyalty program members.
"Secondly, we have to become a lot closer with Singapore Airlines," Toomey told the Business Sunday television program.
Pouring praise on Singapore Airlines, Toomey said the Air New Zealand/Ansett group has a "great opportunity" to leverage off Singapore Airlines' products, technology and commercial relationships.
Another goal is to improve the Star Alliance, of which all three airlines are members, to make it more "seamless" for customers, he said.
Toomey said he hopes to have his strategy in place and to have negotiated with suppliers Boeing Co. (BA) and Airbus Industrie (F.ABI) in time to announce a "relaunch of the airline" later this year.
Other goals include improving the share price, shareholder returns and dividends, he said.
"But the initial goals are that we have to complete the fleet plan, we have to complete the commercial strategy and we have to change the culture within the organization."
Toomey was coy on funding options for the expansion plan, conceding that government restrictions preventing Singapore Airlines from increasing its stake makes fund raising more difficult.
Ideally, the investment for expansion should come from Singapore Airlines, he said, but under existing rules, the maximum shareholding an individual foreign airline can have in Air New Zealand is 25%.
Singapore Airlines has twice had an application to increase its stake rejected.
And while the subject of restructuring Air New Zealand's ownership will be broached at next week's board meeting, there are other options, he said.
"There may be opportunities through some hybrids and other forms of financing, which may not be as effective as a straight equity (injection from Singapore Airlines), but which might get us by for some time. Also, obviously as we improve the performance of the company, the cash thrown off by the business increases and that can fund a lot of the expansion also."
Toomey said he also has been talking to key pilot unions and unions covering airport staff to seek a co-operative approach to reducing costs.
Diversified investment concern Brierley Investments Ltd. (A.BRY) owns about 30% of Air New Zealand
Air NZ's Toomey aims for 2001 relaunch
Sunday February 11, 12:28 AM EST
SYDNEY, Feb 11 (Reuters) - Air New Zealand chief executive Gary Toomey said on Sunday he hoped to be able to announce a relaunch of the troubled airline later this year.
Toomey, former deputy chief executive at rival Qantas Airways Ltd (QAN), said he wanted to make the airline more attractive to customers, complete a new fleet plan and rebuild morale at New Zealand's flagship carrier.
"We hope to have a strategy in place later this year and to have negotiated with alternative suppliers Airbus [ARBU.UL], Boeing (BA), so that we can announce to the market a relaunch of the airline later this year," he told Network Nine's Business Sunday programme.
Air New Zealand, which owns Australia's second rated domestic carrier Ansett Airlines, currently operates a combined fleet of 186 aircraft and operates more than 1,000 flights a day.
Toomey, who took over in December, also said he believed the airline could raise the capital for changes even if the New Zealand government refused to relax the ownership structure of the airline.
Singapore Airlines (SIAL) owns 25 percent of Air New Zealand, the maximum holding for a foreign airline, but has expressed interest in moving to 40 percent.
However, the government has said it has no plans to relax airline ownership rules, which would hamper any plan for Singapore to inject equity and increase its stake.
"There may be opportunities through some hybrids and other forms of financing which may not be as effective as straight equity, but which might get us by for some time," Toomey said.
His initial strategy was to improve the offering for corporate and high yield customers by having Ansett International fly to key destinations, such as Tokyo and Los Angeles.
Air New Zealand also needed to become closer to Singapore Airlines and take advantage of opportunities in its Star Airlines international airlines alliance.
Toomey said he wanted to change the culture at the airline after uncertainty about its future had left some staff disaffected.
Air New Zealand's resident-only A shares (AIRVA) closed on Friday at NZ$1.67, up from a two-year closing low last November of NZ$1.40. The unrestricted B shares closed at NZ$2.22, up from NZ$1.81 in November.
Anyone can fly, only the best Soar.