Forum Archive Index - May 2001

[Greg <g&jelliott@xtra.co.nz>]

Keith,

"cultural realignment"..

Refers to an observation by Andrew Little (NZ Engineering, Printing and
Manufacturing Union national Sec) in the Dominion 17 Apr 01, that Air NZ and
Ansett have a "different culture and approach". There have been problems
with their different approach to maintenance. Ansett workers complained to
Australia's CASA that 'the airline left aircraft repairs till the last
moment for economic reasons.' (Dom, 16 Apr 01, p.1) For whatever reason,
Boeing's airworthiness directive on the B767 also got left too late. This
may have been an error caused by management instability, rather than
cost-cutting, whatever, the systems were not in place, there was not the
same rigorous and methodical approach to maintenance as applied by Air NZ.
Julius Roe (Australian Manufacturing Workers Union) cites Ansett as having
been affected by the competitive Australian market, staff cuts, and economy
measures, leading to a practice of corner cutting and deferred maintenance
(Dom 16 Apr).

Little is elsewhere quoted as highlighting the differences between Air NZ
and Ansett, that 'these things just don't happen at Air NZ', and that
attempts to integrate the two have been difficult because of these
differences - not only differences in standards, but also in approach, which
I refer to as 'culture' (Evening Post 16 Apr 01, p. 11). I think you could
explore several other differences under the 'culture' banner (union
environment and poor labour relations, different approaches to managing
information), but I'd need to research this more.

Air NZ doesn't seem to have recognised the extent of differences when they
integrated in Jun last year. At that time, NcCrea saw 'two strong brands',
each holding 'individual acclaim'. I get the impression he wanted a sort of
JV. Although he speaks of integration and a 'unified structure' back in Feb
2000, he was strong on retaining individual brands and identities i.e. still
2 airlines.  The plans to achieve integration and synergies were slow to
unwind. I wonder if it became more apparent to Air NZ that they were
actually dealing with two quite distinct organisations (cultures), despite
each being in the same business. Well...just live in Australia for a while.
It's 'different'.

By the time Toomey took over in December, the differences had become
apparent, and the problems had surfaced. He had to set about absorbing
Ansett into the new group. Little talks about having to 'drag up standards
across the Tasman'. (Evening Post 16 Apr 01, p.11) The two maintenance
organisations were first to be fully unified, but problems had surfaced with
the 767, and NZ engineers had set about overhauling Ansett's practices -
'checking tens of thousands of documents' according to Toomey (Sunday Star
Times, 22 Apr 01, p. E2).

Toomey also had to kick start the new management structure, which saw
personnel changes as well as a new organisational approach. Not all the
problems were Ansetts. Air NZ has had a very divisionalised structure, with
a highly centralised decision making process. This created an 'us and them'
mentality which thwarted innovation at the periphery, and restricted
communication between SBUs. They were similarly cost driven, though not to
the extent of compromising on maintenance. Toomey has already brought
changes to Air NZ which I put in the 'strategic culture' category - his more
dynamic, people-centred approach, less concerned with centralised control,
more with innovation, initiative and (ultimately) superior performance. He
has told staff he doesn't want labour disputes, and he's prepared to pay a
little more to get the performance he needs. In a way, he's already set
about revitalising the culture of the organisation.

But this is more than a NZ vs Australian culture issue. Its about business
philosophies, management approaches and leadership styles. The group has
been just as keen to extract value from aspects of the SIA culture, in terms
of standards and quality of service.

The bottom line is that Air NZ is looking to create an Australasian airline,
which will be more than simply Air NZ plus Ansett Australia. Where they were
originally looking at keeping separate brands and focusing on synergy, and I
guess taking the best aspects from each of the AirNZ/Ansett/SIA troika, the
merger is likely to lead in time to more of a single identity. I don't know
if they are talking about a single brand - probably too early for that, but
they will certainly want to refocus internally on a single robust company,
which retains the best of three. That means a cultural change. But it will
be very good for business. Does this make sense? Is it useful?

I need to stop and get some work done!

Greg Elliott



> From: K & A Frankum <frankum@xtra.co.nz>
> Reply-To: sharechat@sharechat.co.nz
> Date: Wed, 02 May 2001 08:56:54 +1200
> To: sharechat@sharechat.co.nz
> Subject: Re: Re: [sharechat] Airline shares
> 
> Thought provoking post, but you lost me on.. "cultural realignment"..
> could you explain.    thanks Keith
> 
> 
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