Grant Bradley

Aviation, tourism and energy writer for the Business Herald

New telco boss departs airport with tail wind

Simon Moutter says getting a company's output right for customers in turn generates results for its owners. Photo / Brett Phibbs
Simon Moutter says getting a company's output right for customers in turn generates results for its owners. Photo / Brett Phibbs

Not long after he took over as head of Auckland Airport Simon Moutter showed what an eager learner he is.

He turned up at a presentation by Boeing, normally the preserve of the media, to hear the invariably upbeat sales figures from the plane maker, laced with useful information about trends in aviation.

Moutter was as curious as anyone about an industry he concedes he knew little about back in 2008.

An electrical engineer by training, with previous leadership roles in gas and electricity and heading divisions at Telecom, aviation and tourism was new to him.

"It was quite a rapid learning process no doubt," he says, days before his departure from the airport back to Telecom where he will succeed Paul Reynolds as chief executive.

But he quickly recognised the business was much more than laying concrete runways and building terminals.

Although the trend was emerging before he took over, he put the accelerator down hard and rapidly diversified the business to where now 55 per cent of revenue comes from non-aeronautical ventures - leasing retail space, property development and hotels.

One fund manager describes him as an "asset sweater" who is able to drive businesses hard.

He had to work quickly.

Just weeks after taking up the chief executive's role Lehman Brothers collapsed, global financial meltdown followed and for a while even aviation looked shaky as airline insurer AIG teetered.

"The share price tanked, it wiped out options and my long-term incentive was worthless before I started," says Moutter, aged 52.

The company was faced with the choice of hunkering down or getting on the front foot. Moutter did the latter, reorganised the executive team, looked hard at where efficiencies could be gained and where new revenue was.

"Over that period of time mainly by trial and error we learned a lot about what we could and couldn't achieve.

"We got lots of advice about what would be wasting our time.

"A lot of that was based on perception so we just tried things - some didn't work and some did."

By the measure of market capitalisation his four years has been a resounding success.

Just before he took over the airport was worth $2.3 billion - it's now nearly $3.3 billion and is closing in on Contact Energy as New Zealand's third biggest company.

Its share price has consistently outstripped the NZX index since 2008 and, according to forecasts, the company's on track to make around $137 million of net profit this year.

The airport has been voted by travellers as the best in Australia/Pacific for the past four years.

While the company's runways are a natural monopoly, the airport's 14 million passengers have choices when it comes to voting in awards, shopping and parking.

Large enterprises have the choice of whether to locate there or not. That's where Moutter gets most satisfaction.

"If you nail it for customers you nail it for your owners - it doesn't get much better than that."

Auckland Airport chairwoman Joan Withers says Moutter's contribution to the country had been outstanding.

"He's understood the value drivers at the airport better than anyone else has before," Withers says.

Property development is one of those drivers.

The airport has 1500ha of land and during Moutter's tenure hotels, tourist ventures and big retailers have sprouted up, despite a generally sour property market.

"We've moved from thinking about our landholdings as purely a place to build sheds for things that service aeroplanes to this large and well located piece of land," Moutter says.

"We've got our tails up, even in a tough market we've achieved a lot, with the right investment we can unlock even more value."

Retail within the terminals has been revamped. Moutter says the "mantra" was ensuring choices of good, better and best were on offer and CBD-level prices were the maximum charged. Competition in parking is fierce but even though the airport is offering substantial discounts, revenue growth is in double digits.

Investments in Queenstown Airport and airports in Queensland were met with skepticism at the time but according to Morningstar research had experienced good passenger number growth.

Another big shift has been from being a passive operator "waiting for the phone to ring from an airline" to being an aggressive marketer of the airport's facilities.

Moutter built up the route development team from one part-timer to six full-time seller-marketers who have attracted China Southern Airlines, Hawaiian Airlines and Garuda to fly in.

The team targets airlines and builds a business case for them "then we belt on the doors to get them to take notice of it over and over again," Moutter says. "We're a small opportunity for most airlines. If we wait for their people to do the business case we'd be waiting a long time."

It was a long, hard job attracting airlines. Enticing China Southern Airlines took 12 big meetings, he says.

There have been losses too - Continental quit a service before it started, Aerolineas Argentinas no longer stops in Auckland and Qantas pulled out of its route to the United States this year.

While Moutter started at the airport when prospects for aviation appeared grim and the steep growth in tourist numbers was levelling off, it also gave him the opportunity to put the brakes on major capital investment, the biggest being the northern runway which would have cost more than $300 million.

This in turn has helped make him more popular among airlines than most airport bosses because Auckland is not having to recoup heavy capital costs through landing charges - yet.

Aeronautical charges per passenger will increase roughly in line with inflation although domestic passengers will face steeper rises.

Board of Airline Representatives New Zealand executive director John Beckett says Moutter is "aware of who his major customers are" and had been responsive through the pricing consultation period and in discussions about a new domestic terminal to be built next to the international terminal.

Moutter was "personable" although "fairly tough and if there's something he believes in it's quite hard to budge him".

Arrival at Telecom
* Simon Moutter is about to take over as chief executive at Telecom following the departure of Paul Reynolds.
* Between 1999-2008 Moutter held a variety of roles including chief operating officer at Telecom, managing most parts of the business at one time or another.
* The company has undergone huge changes since he left, with Chorus being floated off and retail competition intensifying.
* As Telecom chief executive, he will get a base salary of $1.35 million plus performance incentives.
* His base salary at the airport was $1.5 million last year.
* The airport company is close to drawing up a short list to replace him.

- NZ Herald

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