Airline cuts could trim $35M off wages

Press, 3 June 1982, Page 1

Airline cuts could trim $35M off wages

LES BLOXHAM,

By

travel editor

Air New Zealand could trim as much as $35 million from its wage bill next year if it succeeds in reducing staff by the numbers announced yesterday.

The long-awaited redundancy. plan calls for a 1400reduction over a. period of three years. The first 500 will probably go by the end of September; a .further 500 by March 31; and the remaining 400 during the following two years.

By the end.of 1985, what is now seen as didesirable staff ceiling — 6600 — should be reached. The airline employed 8798 people in March, 1981, and has 8000 on .its payroll now. Wages and salaries cost the airline $175.4 million, almost 30 per cent of its total expenditure, in the 1980-81 financial year. In spite of the steady reduction in. staff in the financial year just ended, it is believed the wage bill has ■ risen close to $2OO million, or an annual average income of $25,000 for every employee. On that basis, and allowing for ■ inflation, the airline stands to prune at least $35 million from its wage bill in the 1983-84 financial year, if it can achieve the 1000 cutback target set for March 31. After meeting airline executives last evening, the •national secretary of the Engineers’ Union, Mr E. W. J. Ball;'predicted a violent reaction from. Air New Zealand staff today and said, “We are going to try to reverse,this decision. We did not expect any redundancies. We had no idea: of the numbers they are talking about.” Meetings, of Air New Zealand ground and engineering staff will be held in Auckland and Christchurch today. Although the employees now know, officially, how many have to go under the redundancy plan, they will have to wait several more -weeks before the unlucky ones will be identified. “Air New Zealand had too many staff for present and foreseeable, trading - conditions, and it was essential, for the, benefit of all, that numbers be trimmed to help achieve a leaner, more competitive and more cost-effec-tive airline,” .said the chief executive, Mr N. M. T. Geary, according to an N.Z.P.A. report.

He said that it was intended, that staff be treated “as fairly as possible," and redundancy negotiations would be entered into urgently.

To remove uncertainties among staff, the company would seek urgent discussions with representatives to get the reduction plan underway. Mr Geary said. Staff reductions would help make the airline more cost-effec-tive.

“I believe this need is recognised within Air New Zealand and that most employees realise adequate action is necessary for recovery and to ensure the long term future of the company,” said Mr Geary:

A task force would be set up to help redundant staff find new employment. He had in mind union and company nominees working with a Labour Department representative.

The new level of 7056 by next March would have two main divisions in airline management—so4o staff, including engineering, flight operations, cabin services, catering and traffic services—and marketing services—l29l staff in head office and in areas outside Auckland and overseas.

In addition, there would be an administration division with 328 staff; finance division, 314; planning, 21; and personnel, 62. “Although some. surplus senior staff were likely to leave the airline within the next few weeks, most personnel likely to be affected cannot be individually identified until redundancy discussions have been successfully completed with the 11 main unions , and staff industrial groups,” Mr Geary said.

The staff had, been understandably upset by the delay already, said Mr Geary, but there , was no alternative to the process of consultation and. agreement with staff and union representatives.

“I believe staff are anxious to get beyond the trials and tribulations of the last few years.”

, He said that the redundancies earlv next financial

year, which would bring staff numbers below 7000 would come mainly from airline operations.

“With the planned removal of DCIO aircraft from the fleet by the end of the year, the company is already involved ’in discussions with flight crew representatives,” said Mr Geary. “Only when this process has been completed will it be able to release all expected surplus pilots." The Minister of Transport (Mr Gair) said that he supported the airline in its moves. These were only part of a wider restructuring which was vital if the airline was to return to viability, he said.

“We have to cut our suit to fit the cloth, no airline in the world can escape that reality,” he said. The Labour Party’s spokesman on transport, Mr R. W. Prebble, said that the merger of Air New Zealand and the old National Airways Corporation was responsible for the overstaffing problem.

But Mr Gair said that the merger occurred at a time when there was an atmosphere of growth and if it had not happened there would now be “agony in two companies instead of one.” Yesterday’s move had been made only after the airline had “done its arithmetic thoroughly” and looked for alternatives, Mr Gair said.

The staff cuts are similar to those recommended by the United States aviation consultancy, S. S. Colker and Associates, in a recent highly scathing review of the airline.

The Colker report, released on April 26, said that Air New Zealand was heavily overstaffed and badly managed. It recommended massive staff cuts, posed the possibility of a merger with another overseas ariline, and criticised the purchase .of Boeing 747 s to replace DClOs as the airline’s flag carrier.

The report, based on a supposed staff level of 8500, said that the number of Air New Zealand employees should be trimmed to 6000, with 6600 the short-term objective.

The airline said yesterday that the staff level in April was in fact 8018, but Mr Geary’s announcement was in line with the Colker recommendation of a staff ceiling of 6600.

After the , Colker report was published, Air New Zealand’s chairman; Mr R. A. Owens, said, “For a Yank to come here and tell us to make 2500 people redundant is ludicrous.” He called the report “nonsense,, and a waste of public money.”

The management structure of the airline appeared excessive in staff and complex/ ity for a company of its-size, the report said.

“In effect./Air New Zea- ; land’s management structure represents a cumbersome bureacracy characterised by excessive layering of managers and personnel,” he said. “Decisions are prone to be poorly constructed and illtimed and can slip by without adequate challenge.”

The consultants called for a critical review of the management structure, practices and staffing.