After Ansett, the Plug Gets Pulled at Air New Zealand
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After Ansett, the Plug Gets Pulled at Air New Zealand
After a roller-coaster ride that saw Air New Zealand's shares plummet to NZ$0.16 its bankers have called in their facilities and the Government is putting the company into Administration, according to radio reports in New Zealand. Formal announcements are expected later in the day.
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Clark signals statutory management for Air NZ
24 September 2001
Air New Zealand was being prepared over the weekend for statutory management, sources said yesterday.
The board of the national carrier could ask the Government today to appoint a statutory manager after major shareholders Singapore Airlines and Brierley Investments rejected an ultimatum from the board on Friday to immediately commit to an $850 million rescue package, the sources said.
A statutory manager has the power to allow the business to continue operating, repay debt, negotiate with creditors, lay staff off, sell parts of the business or form a new company from the viable business and sell that company.
Unlike receivership, where the interests of creditors come first, under statutory management the rights of the creditors are set aside. Banks could not take possession of assets used to secure loans and landlords could not evict the company from its offices.
It is expected that future bookings, the air points system and other customer services would continue as at present.
Sources said management and advisers had spent the weekend negotiating with Air New Zealand's bankers to ensure they did not repossess aircraft owned by Air New Zealand when they flew overseas. The aircraft were used as security for loans.
The Government could also be required to guarantee Air New Zealand's debts.
The sources said Singapore Airlines and Brierley were told during Friday's crisis board meeting that if they did not commit to the rescue package then the airline would be placed in statutory management.
The board said after the meeting that it would reconvene early this week.
Prime Minister Helen Clark also signalled yesterday that putting Air New Zealand into statutory management might be the way to save the traumatised airline.
She said statutory management would be a viable way of keeping it flying, though the Government was still pursuing its original rescue plan under which Singapore Airlines and Brierley would inject $150 million each. The Government has pledged to provide a $550 million loan facility.
However, the deal is subject to the three parties carefully scrutinising Air New Zealand's financial position, a process that could take several more weeks.
Since the deal was negotiated earlier this month, the share price has plummeted and the global aviation market has been savaged by the fallout from the terrorist attacks on the United States.
Miss Clark said statutory management was an alternative which would enable Air New Zealand to trade its way back into the black.
"In that sense, it's not a bad option. The first option is to proceed with the package, but another clear option is statutory management."
She said statutory management was a good option for a company which had problems but which still had a future.
"What everyone wants is the path forward for the airline which sees it trading profitably, and either option could see that," Miss Clark said.
She did not know whether Air New Zealand would make it through the week without being placed under statutory management, she said.
"I think what most New Zealanders are wanting to know is that the airline will still be flying. I'm sure it will be. If Air New Zealand's still flying, there will still be jobs."
Meanwhile, the Government is to protect Air New Zealand against more financial damage caused by the threat of war by providing a $2 billion indemnity against acts of war and terrorism.
Finance Minister Michael Cullen announced the indemnity today in a bid to stop the teetering airline being dragged down even further by international events.
"Insurance companies have withdrawn their war and terrorism cover, leaving all international airlines with no cover unless alternative means are found," he said.
"The indemnity will be rolled over at monthly intervals till further notice.
"This action is unrelated to, and does not affect, the general situation that faces Air New Zealand or the Government's response to that situation."
24 September 2001
Air New Zealand was being prepared over the weekend for statutory management, sources said yesterday.
The board of the national carrier could ask the Government today to appoint a statutory manager after major shareholders Singapore Airlines and Brierley Investments rejected an ultimatum from the board on Friday to immediately commit to an $850 million rescue package, the sources said.
A statutory manager has the power to allow the business to continue operating, repay debt, negotiate with creditors, lay staff off, sell parts of the business or form a new company from the viable business and sell that company.
Unlike receivership, where the interests of creditors come first, under statutory management the rights of the creditors are set aside. Banks could not take possession of assets used to secure loans and landlords could not evict the company from its offices.
It is expected that future bookings, the air points system and other customer services would continue as at present.
Sources said management and advisers had spent the weekend negotiating with Air New Zealand's bankers to ensure they did not repossess aircraft owned by Air New Zealand when they flew overseas. The aircraft were used as security for loans.
The Government could also be required to guarantee Air New Zealand's debts.
The sources said Singapore Airlines and Brierley were told during Friday's crisis board meeting that if they did not commit to the rescue package then the airline would be placed in statutory management.
The board said after the meeting that it would reconvene early this week.
Prime Minister Helen Clark also signalled yesterday that putting Air New Zealand into statutory management might be the way to save the traumatised airline.
She said statutory management would be a viable way of keeping it flying, though the Government was still pursuing its original rescue plan under which Singapore Airlines and Brierley would inject $150 million each. The Government has pledged to provide a $550 million loan facility.
However, the deal is subject to the three parties carefully scrutinising Air New Zealand's financial position, a process that could take several more weeks.
Since the deal was negotiated earlier this month, the share price has plummeted and the global aviation market has been savaged by the fallout from the terrorist attacks on the United States.
Miss Clark said statutory management was an alternative which would enable Air New Zealand to trade its way back into the black.
"In that sense, it's not a bad option. The first option is to proceed with the package, but another clear option is statutory management."
She said statutory management was a good option for a company which had problems but which still had a future.
"What everyone wants is the path forward for the airline which sees it trading profitably, and either option could see that," Miss Clark said.
She did not know whether Air New Zealand would make it through the week without being placed under statutory management, she said.
"I think what most New Zealanders are wanting to know is that the airline will still be flying. I'm sure it will be. If Air New Zealand's still flying, there will still be jobs."
Meanwhile, the Government is to protect Air New Zealand against more financial damage caused by the threat of war by providing a $2 billion indemnity against acts of war and terrorism.
Finance Minister Michael Cullen announced the indemnity today in a bid to stop the teetering airline being dragged down even further by international events.
"Insurance companies have withdrawn their war and terrorism cover, leaving all international airlines with no cover unless alternative means are found," he said.
"The indemnity will be rolled over at monthly intervals till further notice.
"This action is unrelated to, and does not affect, the general situation that faces Air New Zealand or the Government's response to that situation."
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I don't know if they are finished. The latest report from one news is at:
http://onenews.nzoom.com/news_detail...43-1-7,00.html
http://onenews.nzoom.com/news_detail...43-1-7,00.html
Guv,
We don't need this scare mongering at the moment.
The board have been in one 'crisis' meeting after another for the past two weeks, that's no news. We are not expecting any announcement until Wednesday our time, we are expecting to be placed into statutory management as a last resort.
Things are going to change dramatically, but because of our geographic isolation, the international airline is a strategic asset to the country. Therefore will not be permitted to cease operation.
The shares are currently trading, dipped to nz16 cents (even for the kiwi-rubble that's not much), but back at 22 ish now.(That's about 10 cents u.s. or 8 p).
To quote a statement from acting chairman Jim Farmer at midday today (Monday):
Farmer says that good progress was made over the weekend by the major shareholders and the government in advancing plans to recapitalise the airline.
"I now expected to be able to reconvene the meeting of the full board of the company early in the week to resume the discussions that were adjourned last Friday," Farmer said.
In response to speculation that the only other alternative for the airline is the sanctuary of statutory management, Farmer said that was a last resort.
Statutory management would effectively freeze the airline's debts allowing it to keep operating while a longer-term rescue package is worked out.
[ 24 September 2001: Message edited by: wong one ]
We don't need this scare mongering at the moment.
The board have been in one 'crisis' meeting after another for the past two weeks, that's no news. We are not expecting any announcement until Wednesday our time, we are expecting to be placed into statutory management as a last resort.
Things are going to change dramatically, but because of our geographic isolation, the international airline is a strategic asset to the country. Therefore will not be permitted to cease operation.
The shares are currently trading, dipped to nz16 cents (even for the kiwi-rubble that's not much), but back at 22 ish now.(That's about 10 cents u.s. or 8 p).
To quote a statement from acting chairman Jim Farmer at midday today (Monday):
Farmer says that good progress was made over the weekend by the major shareholders and the government in advancing plans to recapitalise the airline.
"I now expected to be able to reconvene the meeting of the full board of the company early in the week to resume the discussions that were adjourned last Friday," Farmer said.
In response to speculation that the only other alternative for the airline is the sanctuary of statutory management, Farmer said that was a last resort.
Statutory management would effectively freeze the airline's debts allowing it to keep operating while a longer-term rescue package is worked out.
[ 24 September 2001: Message edited by: wong one ]
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These vultures at AirNZ had been sucking Ansett dry to prop up their own operation for over a year. The rumour is that AirNZ has been puting their entire fuel bill(~$30Mil/week) thru AN accounts and have sold AN aircraft then leased them back and shipped the cash to Auckland. The whole thing's a scandal. 
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It seems that SQ have burned around $500,000,000 with what IMHO certainly appears like duplicitous conduct and playing games on this one.
They also appear, with their stalking partner BIL, to have reneged on an agreement to apply a similar amount, which then precipitated the crunch.
I understand that their share price has fallen from around $S17.50 to $S7.50 partly as a result of the general WTC issue but the AirNZ and other "strategic" investments that haven't quite come into focus so to speak.
It can't be denied that AirNZ made some blues but it seems that they did have a little help from their SQ "friends".
They are on dangerous ground.
Air NZ will almost certainly go to QF and Ansett or whats left of it will be put beyond their reach.
Don't expect the OZ and NZ Governments to do any more favours for SQ.
Is the good Dr naked or is he wearing clothes, anyone?
[ 24 September 2001: Message edited by: gaunty ]
They also appear, with their stalking partner BIL, to have reneged on an agreement to apply a similar amount, which then precipitated the crunch.
I understand that their share price has fallen from around $S17.50 to $S7.50 partly as a result of the general WTC issue but the AirNZ and other "strategic" investments that haven't quite come into focus so to speak.
It can't be denied that AirNZ made some blues but it seems that they did have a little help from their SQ "friends".
They are on dangerous ground.
Air NZ will almost certainly go to QF and Ansett or whats left of it will be put beyond their reach.
Don't expect the OZ and NZ Governments to do any more favours for SQ.
Is the good Dr naked or is he wearing clothes, anyone?
[ 24 September 2001: Message edited by: gaunty ]
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Lots of contributors are positively salivating at the thought of ANZ's demise, ANFO being one of them. It was reported on National Radio today (not a rumour) that the Ansett Administrator, Mark Mentha, has apologised to Air NZ for his comments about Ansett's books and says legal action against Air NZ may be months away if at all.
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Not quite as elegant as Guvs but the best I can do.
Fairly dramatic I'd say
SQs plug might not have been pulled but the bath sure is leaking
[ 24 September 2001: Message edited by: gaunty ]
Fairly dramatic I'd say
SQs plug might not have been pulled but the bath sure is leaking
[ 24 September 2001: Message edited by: gaunty ]
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Go & talk to the guys at Gill Airways RIP.
They went into Administration 18 months ago & came out in July this year & almost managed a full recovery until OBL stepped in & Bank Of Scotland pulled the plug even thought they were in credit, & how many airlines can boast that!!!
Having been there & got the 'T' Shirt & Video, Admin is a hard road & tears will be shed but if you want to stop the hemorrhaging, major surgery is the only cure.
Give Malcolm Naylor (ex MD at GILL) a ring, he might pull the rabbit out of the hat yet....
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Hopefully Administration for a national flag Carrier will be a bit different from Gil. To the many hard working friends at ANZ I wish you all the best of British and hope that the outcome is positive for all. BIL have bleed ANZ dry and done nothing but fragment the company. As someone put it you can only sell the silver ware once and their unending hunt for high profits over the years has finally crippled the company. That together with the decission to buy 100% of Ansett, and then sitting and watching it be mismanaged as well. How can managers that get paid 6 and 7 figure sums be so far out of touch with how the comany's that they manage are performing, to let them get so far in the s*&t" that they need to be bailed out by the Government. The debts of ANZ and Ansett rest with them and the people who appointed them, BIL and SQ.
Keep your noses to the grind stone boys nad hope that it all works out.
[ 24 September 2001: Message edited by: GStall ]
Keep your noses to the grind stone boys nad hope that it all works out.
[ 24 September 2001: Message edited by: GStall ]
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As most of us would remember, in late 1979 a DC10 aircraft operated by Air New Zealand impacted the lower slopes of Mt Erebus and gouged a crater, 4 metres deep and 600 metres long into the snow and ice. 257 souls perished in an instant. Now - 22 years later at approx. 2 AM eastern time last Fri. the 14th of September the Air New Zealand organization suffered yet another tragic accident (although I use the word accident advisedly). With the stroke of a pen 16,000 innocent persons had their lives changed forever. Ansett Airlines lay smoldering on the upper slopes of a mountain of greed and mismanagement. Perhaps greed is the wrong word because it implies an ability and a will, both of which the fools on the Air NZ do not posses – lets say stupidity and mismanagement.
It is a matter of public record that in 1979 the corporate culture of Air N.Z. committed huge resources to shift the blame for those 257 deaths onto the Aircrew through a process that included discrediting a royal commissioner, discrediting the crews initial training and those who conducted it, and astonishingly even breaking into of one crew member’s home in a vain attempt to gather discrediting personal evidence. MAKE NO MISTAKE!! This process is happening again. The corporate culture of 1979 is alive and well at Air New Zealand in 2001. The Air New Zealand board will use every resource at its disposal to shift the blame of this organizational accident onto the Australian government, the New Zealand government, Ansett middle management, Saudi oil interests, the Australian dollar, and quite possibly the hard working Ansett staff. This, from the people who after buying 50% of Ansett allowed News Corp. sole access to the management of the company and who didn’t even bother to carry out ‘due diligence’ for the purchase of the remaining 50% until AFTER they had paid News Corp. the inflated price.
I may receive some criticism for comparing the loss of lives with the loss of jobs, and of course this comparison should not be done. What I am suggesting is the parallels that can be drawn in the “corporate culture” that inextricably links the 2 events. I fear for the innocent workers at the coalface in New Zealand. Ample evidence is emerging that they may face a similar fate in the not to distant future. This further failure, I feel, is necessary for the industry. We do not need such a cowboy organization in our ranks… it can only eventually lead to more than “organizational” accidents. I refer here, of course to the leaders of Air NZ - the board. While I agree that the “cutting free” of Ansett by the Air New Zealand organization should be countered by a cutting of the anchor chain that holds their islands socially, and economically, to Australia's shirt tales, and stops them from floating into oblivion, please focus your rage on the true culprits. Culprits who, while America was being attacked live on television, attacked the aviation industry in this country by stealth before retreating to their corporate lair across the Tasman.
We have already witnessed on the Business Sunday programme in Australia (23/09/01)the most appalling form of buck passing from the gentleman in New Zealand who gives Farmers a bad name. This fool, who has been purported to be a business leader and who is apparently a Queens Counsel, would not even know what to do with a pair of Velcro gloves in his sad country.
While at Uni. in London last year it was suggested to my class by persons of high standing in the aviation industry that the future of our industry is an eventual structure comprising of 3 or 4 major organisations only. This restructuring of the industry was suggested as taking 10 - 15 years during which time smaller, less profitable, airlines would be forced out financially and the larger airlines would indulge in mega mergers. So far I have not seen any evidence to refute this concept and the events in recent weeks, around the world, simply make me think that this may indeed be the road that will be travelled - but in a much shorter time frame.
Seems our industry and our jobs may be very different animals in the not too distant future - I'm suggesting to my son he gets a trade under his belt before playing with aeroplanes!!
It is a matter of public record that in 1979 the corporate culture of Air N.Z. committed huge resources to shift the blame for those 257 deaths onto the Aircrew through a process that included discrediting a royal commissioner, discrediting the crews initial training and those who conducted it, and astonishingly even breaking into of one crew member’s home in a vain attempt to gather discrediting personal evidence. MAKE NO MISTAKE!! This process is happening again. The corporate culture of 1979 is alive and well at Air New Zealand in 2001. The Air New Zealand board will use every resource at its disposal to shift the blame of this organizational accident onto the Australian government, the New Zealand government, Ansett middle management, Saudi oil interests, the Australian dollar, and quite possibly the hard working Ansett staff. This, from the people who after buying 50% of Ansett allowed News Corp. sole access to the management of the company and who didn’t even bother to carry out ‘due diligence’ for the purchase of the remaining 50% until AFTER they had paid News Corp. the inflated price.
I may receive some criticism for comparing the loss of lives with the loss of jobs, and of course this comparison should not be done. What I am suggesting is the parallels that can be drawn in the “corporate culture” that inextricably links the 2 events. I fear for the innocent workers at the coalface in New Zealand. Ample evidence is emerging that they may face a similar fate in the not to distant future. This further failure, I feel, is necessary for the industry. We do not need such a cowboy organization in our ranks… it can only eventually lead to more than “organizational” accidents. I refer here, of course to the leaders of Air NZ - the board. While I agree that the “cutting free” of Ansett by the Air New Zealand organization should be countered by a cutting of the anchor chain that holds their islands socially, and economically, to Australia's shirt tales, and stops them from floating into oblivion, please focus your rage on the true culprits. Culprits who, while America was being attacked live on television, attacked the aviation industry in this country by stealth before retreating to their corporate lair across the Tasman.
We have already witnessed on the Business Sunday programme in Australia (23/09/01)the most appalling form of buck passing from the gentleman in New Zealand who gives Farmers a bad name. This fool, who has been purported to be a business leader and who is apparently a Queens Counsel, would not even know what to do with a pair of Velcro gloves in his sad country.
While at Uni. in London last year it was suggested to my class by persons of high standing in the aviation industry that the future of our industry is an eventual structure comprising of 3 or 4 major organisations only. This restructuring of the industry was suggested as taking 10 - 15 years during which time smaller, less profitable, airlines would be forced out financially and the larger airlines would indulge in mega mergers. So far I have not seen any evidence to refute this concept and the events in recent weeks, around the world, simply make me think that this may indeed be the road that will be travelled - but in a much shorter time frame.
Seems our industry and our jobs may be very different animals in the not too distant future - I'm suggesting to my son he gets a trade under his belt before playing with aeroplanes!!
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'Teflon' Toomey fussed over the details
By ROY MASTERS
and GEOFFREY THOMAS
Monday 24 September 2001
Air New Zealand chief Gary Toomey admits he is obsessed by security, which
helps explain why he believes he would need an army to protect him if he
ever returned to Australia.
"I think that the recent tragedy in the United States demonstrates that
anyone with a position of responsibility in an airline should be obsessed
with security," he said in answer to a series of questions faxed to his
secure floor in the Auckland headquarters of the airline he has headed since
January this year.
"Concern for safety and security is basic to survival in the airline
industry." An obsession with airline security or personal safety? When
Toomey's face became the centre of Ansett's $20 million advertising campaign
following the Easter grounding of their Boeing 767-200 fleet, he had a
personal bodyguard.
His former colleagues at Qantas claim he would instruct staff to gain a
security assessment to determine the safety of a journey from Mascot to the
Rocks. His $3 million home on Sydney's north shore was turned into an
electronic fortress with a sophisticated security system. He had a satellite
navigation system installed in his 7 series BMW.
His annual mobile phone bill of $120,000 was generated by an obsession with
detail, even to the extent of leaving long voicemail messages to staff at
midnight. When expensive furniture was installed in his office at Qantas's
corporate headquarters at Mascot, Toomey ordered the replacement of a desk
because there was a small crack in the grain. Still, the crack would have
been noticeable because Toomey prides himself on a paperless desk.
His obsession with cleanliness extends to staff being warned of his
impending arrival at a port, with a cleaning crew employed to check for
lipstick marks on glasses in airport lounges or chewing gum under seats.
Asked how he defended his reputation for micromanaging, Toomey said: "With
ease. If others are prepared to deliver sub-standard levels of care and
cleanliness to our customers, I am not.
"I want all of my colleagues to share a sense of responsibility for
delivering high standards of service to our customers at every level of our
operations, and I try to lead by example. If I don't care - why should they?
Although Toomey became Ansett's frontman after the Easter crisis this year
when the Civil Aviation Safety Authority grounded the fleet, he remained (in
his words) "hunkered down" in New Zealand while his vice president
operations Trevor Jensen struggled to explain Ansett's predicament.
It was the biggest day in the company's 65-year history.
Toomey denies he was ordered out of his Auckland office by Air New Zealand
chairman Sir Selwyn Cushing, saying, "While I was in New Zealand when the
grounding was ordered, I was advised of it immediately. "My first task was
to determine how much of the Air New Zealand fleet could be sent to
Australia to cover what amounted to the loss of a quarter of Ansett's normal
carrying capacity at the busiest time of the year."
"My next task was to start contacting other allied airlines around the world
to see what additional aircraft they could provide. As soon as I had done
all I could to put those arrangements in train, I flew to Australia to
oversee the recovery operation.
"I kept my chairman advised of what I was doing throughout and there was no
order needed to get me to go back to Australia."
Still, some of his former colleagues at Qantas see a link between Toomey's
Easter hunker down and his non-involvement in the September 1999 crisis when
QF1 overran the Bangkok runway.
As deputy ceo operations, making him responsible for pilots and engineering,
the organisation of the recovery was Toomey's responsibility.
His executive general manager (operations) David Forsythe took charge while
Toomey was in Fiji and later Hong Kong. Toomey denies he avoided any
responsibility, saying, "I was in Fiji attending a board meeting of Air
Pacific when the incident in Bangkok occurred. The company's decision was
that the chief executive (James Strong) would take responsibility for
communication about it."
The Air Transport Safety Board report on the Qantas accident attributed
blame in part to cost-cutting and incorrect procedures.Toomey simultaneously
accepts and sheds accountability for this, saying, "I share the
responsibilities of all Qantas management in regard to this matter. "While
cost cutting targets were set to support commercial and operational
viability of the airline, unit managers were responsible for determining how
they would be achieved".
"My particular responsibility was for managing the achievement of the
general target - not for determining the individual measures that unit
managers took to deliver their contribution."
Mr Toomey deserves considerable credit for the financial strength of the
Australian Airlines-Qantas merger.
As head of AA's financial division, Toomey showed a fresh and innovative
approach to airline finance and quickly joined Qantas when Strong became
CEO.
Mr Toomey recruited some of the best financial brains as he helped Mr Strong
sort out the financial puzzle.
When Mr Toomey arrived at Air NZ-Ansett, adding the title president to his
chief executive role, he was already in damage control. Ansett's 767s had
been grounded over the Christmas holidays after a maintenance blunder.
Three key corporate clients were ready to walk. This would have crippled the
airline.
Mr Toomey did the rounds of corporate Melbourne and Sydney to talk up the
ailing airline. It worked. However, there were not only cracks in the Ansett
aircraft, the airline's executive was anything but cohesive.
Mr Toomey put his faith in George Frazis, his strategy executive, who is
described by insiders as very bright but not always on side with others in
the executive team. Mr Toomey stood by Mr Frazis.
Most on the executive team wanted a 20 per cent cut in staff at Ansett but
Mr Toomey's entire strategy was to take Virgin Blue out with a takeover,
thus eliminating the low-fare competition that had laid bare Ansett's
bloated high-cost structure.
Mr Toomey defends his team, saying: "My management team was appointed to
find problems and suggest ways to fix them. I'm going to defend that team of
people - many of whom worked round the clock, gave up days off and holidays,
and are now being vilified for trying to find solutions to problems that
weren't of their making."
Mr Toomey, 46, is known for his great acts of compassion to staff, being
generous and kind to those with personal problems.
He will be embroiled in Ansett affairs for some time yet, now that the
Australian Securities and Investments Commission has launched an
investigation into whether the airline was trading while insolvent. A leaked
Air NZ-Ansett document has cast doubts on the airline group's unaudited
results, which claimed a trading loss of only $150 million for Ansett
Holdings, before interest and tax, in the year just ended.
The document was part of a comprehensive Air NZ-Ansett pitch to the
Australian Government in late June garnering support for Singapore Airlines
to take a big stake in Air NZ, and thus Ansett, and bailing out the
Australian airline.
In the presentation, Mr Toomey told Australian Deputy Prime Minister John
Anderson that Ansett would lose $250 million before tax, a $360 million
turnaround from the previous year.
However, in early June, a senior executive at Ansett who was leaking
information to the West Australian newspaper said that the loss was at least
$400 million with some internal estimates as high as $460 million. The paper
published that figure on June 9, but Toomey said the claim was ill-informed.
However, at the same time Toomey appeared to verify the $400 million loss
figure, telling Anderson that Ansett was losing a staggering $18 million a
week.
Mr Toomey insists he has not blamed Singapore Airlines or former part owners
News Ltd or Qantas or the board of Air New Zealand for Ansett's demise.
Nicknamed "Teflon Toomey" at Qantas because nothing stuck, he is now
receiving death threats, admitting, "I can't go back to Australia. I
literally can't, unless I go with an army."
By ROY MASTERS
and GEOFFREY THOMAS
Monday 24 September 2001
Air New Zealand chief Gary Toomey admits he is obsessed by security, which
helps explain why he believes he would need an army to protect him if he
ever returned to Australia.
"I think that the recent tragedy in the United States demonstrates that
anyone with a position of responsibility in an airline should be obsessed
with security," he said in answer to a series of questions faxed to his
secure floor in the Auckland headquarters of the airline he has headed since
January this year.
"Concern for safety and security is basic to survival in the airline
industry." An obsession with airline security or personal safety? When
Toomey's face became the centre of Ansett's $20 million advertising campaign
following the Easter grounding of their Boeing 767-200 fleet, he had a
personal bodyguard.
His former colleagues at Qantas claim he would instruct staff to gain a
security assessment to determine the safety of a journey from Mascot to the
Rocks. His $3 million home on Sydney's north shore was turned into an
electronic fortress with a sophisticated security system. He had a satellite
navigation system installed in his 7 series BMW.
His annual mobile phone bill of $120,000 was generated by an obsession with
detail, even to the extent of leaving long voicemail messages to staff at
midnight. When expensive furniture was installed in his office at Qantas's
corporate headquarters at Mascot, Toomey ordered the replacement of a desk
because there was a small crack in the grain. Still, the crack would have
been noticeable because Toomey prides himself on a paperless desk.
His obsession with cleanliness extends to staff being warned of his
impending arrival at a port, with a cleaning crew employed to check for
lipstick marks on glasses in airport lounges or chewing gum under seats.
Asked how he defended his reputation for micromanaging, Toomey said: "With
ease. If others are prepared to deliver sub-standard levels of care and
cleanliness to our customers, I am not.
"I want all of my colleagues to share a sense of responsibility for
delivering high standards of service to our customers at every level of our
operations, and I try to lead by example. If I don't care - why should they?
Although Toomey became Ansett's frontman after the Easter crisis this year
when the Civil Aviation Safety Authority grounded the fleet, he remained (in
his words) "hunkered down" in New Zealand while his vice president
operations Trevor Jensen struggled to explain Ansett's predicament.
It was the biggest day in the company's 65-year history.
Toomey denies he was ordered out of his Auckland office by Air New Zealand
chairman Sir Selwyn Cushing, saying, "While I was in New Zealand when the
grounding was ordered, I was advised of it immediately. "My first task was
to determine how much of the Air New Zealand fleet could be sent to
Australia to cover what amounted to the loss of a quarter of Ansett's normal
carrying capacity at the busiest time of the year."
"My next task was to start contacting other allied airlines around the world
to see what additional aircraft they could provide. As soon as I had done
all I could to put those arrangements in train, I flew to Australia to
oversee the recovery operation.
"I kept my chairman advised of what I was doing throughout and there was no
order needed to get me to go back to Australia."
Still, some of his former colleagues at Qantas see a link between Toomey's
Easter hunker down and his non-involvement in the September 1999 crisis when
QF1 overran the Bangkok runway.
As deputy ceo operations, making him responsible for pilots and engineering,
the organisation of the recovery was Toomey's responsibility.
His executive general manager (operations) David Forsythe took charge while
Toomey was in Fiji and later Hong Kong. Toomey denies he avoided any
responsibility, saying, "I was in Fiji attending a board meeting of Air
Pacific when the incident in Bangkok occurred. The company's decision was
that the chief executive (James Strong) would take responsibility for
communication about it."
The Air Transport Safety Board report on the Qantas accident attributed
blame in part to cost-cutting and incorrect procedures.Toomey simultaneously
accepts and sheds accountability for this, saying, "I share the
responsibilities of all Qantas management in regard to this matter. "While
cost cutting targets were set to support commercial and operational
viability of the airline, unit managers were responsible for determining how
they would be achieved".
"My particular responsibility was for managing the achievement of the
general target - not for determining the individual measures that unit
managers took to deliver their contribution."
Mr Toomey deserves considerable credit for the financial strength of the
Australian Airlines-Qantas merger.
As head of AA's financial division, Toomey showed a fresh and innovative
approach to airline finance and quickly joined Qantas when Strong became
CEO.
Mr Toomey recruited some of the best financial brains as he helped Mr Strong
sort out the financial puzzle.
When Mr Toomey arrived at Air NZ-Ansett, adding the title president to his
chief executive role, he was already in damage control. Ansett's 767s had
been grounded over the Christmas holidays after a maintenance blunder.
Three key corporate clients were ready to walk. This would have crippled the
airline.
Mr Toomey did the rounds of corporate Melbourne and Sydney to talk up the
ailing airline. It worked. However, there were not only cracks in the Ansett
aircraft, the airline's executive was anything but cohesive.
Mr Toomey put his faith in George Frazis, his strategy executive, who is
described by insiders as very bright but not always on side with others in
the executive team. Mr Toomey stood by Mr Frazis.
Most on the executive team wanted a 20 per cent cut in staff at Ansett but
Mr Toomey's entire strategy was to take Virgin Blue out with a takeover,
thus eliminating the low-fare competition that had laid bare Ansett's
bloated high-cost structure.
Mr Toomey defends his team, saying: "My management team was appointed to
find problems and suggest ways to fix them. I'm going to defend that team of
people - many of whom worked round the clock, gave up days off and holidays,
and are now being vilified for trying to find solutions to problems that
weren't of their making."
Mr Toomey, 46, is known for his great acts of compassion to staff, being
generous and kind to those with personal problems.
He will be embroiled in Ansett affairs for some time yet, now that the
Australian Securities and Investments Commission has launched an
investigation into whether the airline was trading while insolvent. A leaked
Air NZ-Ansett document has cast doubts on the airline group's unaudited
results, which claimed a trading loss of only $150 million for Ansett
Holdings, before interest and tax, in the year just ended.
The document was part of a comprehensive Air NZ-Ansett pitch to the
Australian Government in late June garnering support for Singapore Airlines
to take a big stake in Air NZ, and thus Ansett, and bailing out the
Australian airline.
In the presentation, Mr Toomey told Australian Deputy Prime Minister John
Anderson that Ansett would lose $250 million before tax, a $360 million
turnaround from the previous year.
However, in early June, a senior executive at Ansett who was leaking
information to the West Australian newspaper said that the loss was at least
$400 million with some internal estimates as high as $460 million. The paper
published that figure on June 9, but Toomey said the claim was ill-informed.
However, at the same time Toomey appeared to verify the $400 million loss
figure, telling Anderson that Ansett was losing a staggering $18 million a
week.
Mr Toomey insists he has not blamed Singapore Airlines or former part owners
News Ltd or Qantas or the board of Air New Zealand for Ansett's demise.
Nicknamed "Teflon Toomey" at Qantas because nothing stuck, he is now
receiving death threats, admitting, "I can't go back to Australia. I
literally can't, unless I go with an army."