21 May 2012

Speculation over direction of Air NZ under new boss

6:36 am on 21 May 2012

Commentators say it should be more of the same for Air New Zealand which is expected to name a replacement for outgoing chief executive Rob Fyfe soon.

Mr Fyfe steps down at the end of the year and Air New Zealand has signalled a new boss will be named around the middle of the year.

He is credited with strengthening the airline in an industry where losing money appears easier than making it.

Mr Fyfe kept Air New Zealand's dominance in the local skies, returned the tough trans-Tasman market to profitability through a tie up with Virgin Australia, and pioneered new routes to China.

But the pressures are intense due to high oil prices, a downturn in patronage from Europe, fierce competition which is losing the national carrier money on its international long haul flights and delays in getting newer, more fuel efficient planes.

Forsyth Barr head of research Rob Mercer says leadership is critical in what is a highly complex business.

Milford Asset Management executive director Brian Gaynor agrees, saying a bold, decisive decision maker with strategic skills is needed.

"The industry is changing dramatically, particularly on the long haul routes because of increased competition from Chinese airlines and from Emirates and others and therefore the airline companies have got to close down all traditional routes that are not profitable and look for new profitable routes", he says.

Mr Fyfe aimed to expand to country's like India, though that's been shelved for now, and Mr Gaynor says that is a real opportunity since no airline currently flies from Australasia.

Mr Fyfe also signalled the airline had no intention of pulling out of London, despite the route being unprofitable.

Mr Gaynor says the new chief executive may have to make some hard decisions and it may be better to have partnership agreement with another airline from Los Angeles to London.

Meanwhile, at current share prices, the Government is staring at losses after stepping in to prop up the airline in 2001.

Mr Gaynor says the Government shouldn't be in any hurry to reduce its stake, because improving Air New Zealand's ailing international services could take at least three years.