High-flyer takes on Air NZ

By JAN CORBETT

Aussie rules football teams usually reflect class, privilege and power. The exception is Melbourne's Western Bulldogs.

Considered one of the code's roughest, toughest teams, they draws their fans from working-class lads who grew up on the mean streets of Melbourne's industrial west, where the suburbs have unlikely names like Sunshine.

Perhaps no Western Bulldogs fan fits that profile more neatly than the new chief executive at Air New Zealand.

A working-class boy who dragged himself out of Sunshine by his bootstraps, 45-year-old Gary Toomey is lining up against the privileged, powerful and glamorous elite of the airline industry to play what must be the game of his life.

But if his seven-year career at Qantas is any indication, further analogies with his favourite team are limited. Unlike the Western Bulldogs, laughs one Australian aviation writer, Gary Toomey "has never appeared before a tribunal for scratching or gouging."

Running Air New Zealand - still a national icon despite substantial foreign ownership - gives him the chance not only to show what a boy from Sunshine can do, but ultimately to score against the man who pipped him for the top post at Qantas.

Cut to 1993, when Qantas, two years out from privatisation, was a flabby, nepotistic haven for politically favoured bureaucrats and businessmen seeking a cushy, pre-retirement job.

Enter the bow-tied new chief executive James Strong, familiar to New Zealanders from his brief tenure running DB Group.

Mr Strong had the mandate to turn "the Government airbus" into a profit-driven company Australians would stampede to buy shares in. He assembled a team of trusted executives from his earlier days heading Australian Airlines before it merged with Qantas, among them Mr Toomey, then only a year into a new job as chief financial officer at Arnotts.

It had been a heady rise since the 21-year-old Mr Toomey joined accounting firm Peat Marwick Mitchell in 1976. Five years later he was into the first of a succession of company secretary posts, until the Australian Airlines job was offered in 1987. But it was not until he followed Mr Strong to Qantas as chief financial officer, that his light began flashing on Australia's corporate radar screen.

Analysts, unionists and aviation reporters credit Mr Toomey with the financial acumen that gave Qantas a continuous run of record profits, even during the Asian crisis. By 2000 it was reporting a $A705 million profit, more than double the $A301 million it returned in 1994, earning a reputation as one of the world's most cost-efficient airlines.

Former Australian Financial Review journalist turned aviation analyst Ian Thomas says Mr Toomey distinguished himself at Qantas for introducing sophisticated foreign-exchange and hedging management, previously unknown at the airline, and for negotiating more favourable aircraft leasing and interest terms. Then came the cost cutting.

Martin Foley, president of the Australian Services Union representing airline staff, remembers Mr Toomey as a tough negotiator when Qantas called for a competitive job-tendering process for airport jobs.

Although observers doubted whether Qantas wanted to lose its experienced staff, the threat of turning jobs over to a private contractor put the union in the unusual position of having to draw up a cost-cutting strategy to keep its members employed on existing terms and conditions.

That the union was manoeuvred into doing Mr Toomey's cost-cutting work for him was indeed a master-stroke.

"He was very smart about it," Mr Foley agrees. "You have to admire him for his ruthlessness and attention to bringing costs down."

In 1996-97 alone, Qantas trimmed $A560 million off its costs and, according to press reports at the time, a considerable chunk of staff morale went with it.

Not only did staff resent the extra effort required to meet the type of productivity demands shareholders expect, but Mr Toomey's attention to detail sometimes rankled in a company that had not quite thrown off its Government department culture.

Like the time he reputedly called the window cleaners back after a bird soiled his newly cleaned panes, or when he bawled out Melbourne airport staff after, as the Age newspaper reported it, "One of Gary Toomey's handcrafted leather shoes had attached itself to a piece of chewing gum matted in the coloured carpet."

By 1998, Business Review Weekly was naming Mr Toomey among the most promising new generation of management talent in Australia and one to watch in the next decade.

The same year he was made a director of ANZ, putting him at the same boardroom table as our own Dr Roderick Deane and fellow Qantas director (now chairman), Margaret Jackson.

But privately Mr Toomey lamented that he never received his dues when the press went looking for whose hands were on the controls of the newly soaring Qantas.

Although long on ambition, Mr Toomey, like his predecessor at Air New Zealand Jim McCrea, is short on the sort of charisma that carries public company executives a long way. At press briefings, Mr Strong would sometimes have to step in and translate his jargon-ridden explanations.

During an inaugural Qantas trip to Beijing, the fit, lithe Mr Strong bounded effortlessly up the remorseless steps of the Great Wall, leaving Mr Toomey, whose physique is nowhere near as lean and mean as his made-over airline, gasping in his wake.

But Mr Strong's announcement that he would stand down as CEO this year left Mr Toomey racing a different man to the top - Geoff Dixon, 15 years his senior, who ultimately won the board's approval.

Mr Dixon's personal charm, closer relationship with corporate clients and operational experience would have given him the lead over Mr Toomey, who was still perceived as a taciturn, backroom number-cruncher, albeit one who engendered considerable loyalty within his department.

The board still considered Mr Toomey a natural successor to Mr Dixon, and the appointment gave him the opportunity to expand his operational experience.

But Mr Toomey, clearly impatient for a chief executive's position, may have felt vulnerable after Mr Strong's departure and may not have been interested in maintaining a holding pattern, even on an annual income of $A1.3 million including bonus.

That Mr Dixon's anointing coincided with Mr McCrea's sudden departure from his $1.3-million-a-year job at Air New Zealand made Mr Toomey a natural contender to replace him, especially as no heir-apparent had been groomed.

Mr Toomey knew the airline and its chairman, Sir Selwyn Cushing, from the mid-90s, when Qantas was a shareholder and he sat as an alternate director. More importantly, Sir Selwyn knew him.

Denying Australian press reports that Mr Toomey was his fourth choice rather than his first, Sir Selwyn says his intimate knowledge of the Australian market was his chief credential, especially now that Ansett is the company's largest holding, and its biggest risk.

Nevertheless, Ian Thomas considers Mr Toomey's appointment an experiment. Airline chiefs have traditionally been raised in engineering, not finance. And Mr Toomey must prove his lack of operational experience is no handicap. Every time he walks out of the Air New Zealand building and is confronted by Qantas' imposing, wrap-around Downtown advertising, he will feel the shadow of his old company.

And although the Australian Competition and Consumer Commission has put the brakes on Qantas' bid for Australian regional carrier Hazelton, the battle for it with Ansett has been interpreted as his chance to triumph over Mr Dixon.

Sydney analysts like Jason Smith, at Salomon Smith Barney, believe the aggressive and motivated Mr Toomey will provide the young, fresh change in attitude that Air New Zealand needs, plus a shoring-up of the management ranks and reporting systems.

Already, he has lured Adam Moroney and Kevin Turnbull from his profit-enhancing team at Qantas.

"He's got a strong track record at bringing on high-calibre people," says Mr Smith.

The test now is whether he can successfully complete folding Ansett into Air New Zealand and enhance the revenue from the structures Sir Selwyn has spent the past six months designing.

A wide Air New Zealand-Ansett voluntary redundancy scheme is under way, and labour-intensive data-capturing work has been sent to low-wage Mexico. But with Air New Zealand already a lean machine, Mr Toomey's cost cutting talents will be felt more sharply at Ansett, where already 186 jobs are on the line.

With Ansett his chief focus for the next 18 months, he will be spending a considerable time in his hometown, Melbourne, with no doubt an occasional Saturday off to barrack for the Western Bulldogs.