Max takes the axe to Sydney Airports

Recently installed executive chairman and chief executive Max Moore-Wilton initiated a review of operations when he joined the organisation in mid-January. This has two months to run, before consideration by the board, with implementation planned from mid-year.

Mr Moore-Wilton was lured by Macquarie Bank from his position as the most senior federal public servant, as head of the Department of the Prime Minister and Cabinet in Canberra.

His appointment followed the $5.6 billion acquisition of the airport by an investment syndicate put together by the bank, and forms a key part of a strategy aimed at cutting costs and boosting revenue growth, so that investors can generate a positive return from the asset.

But soft travel numbers and the prospect of a sharp downturn in traffic if the US attacks Iraq threaten to throw earnings off track, forcing the airport manager to launch a widespread cost freeze, including hiring of staff and non-essential capital spending.

The management structure has been flattened, with security and safety now reporting directly to the chief executive, given heightened focus on this area of the airport's operations.

``It is a flatter revenue structure, focused on revenue streams," Mr Moore-Wilton said. ``It cuts some layers and increases reporting to me."

The previous chief executive had six directors reporting to him.

Sydney Airports Corporation has 396 employees, more than double the 160 at Melbourne's Tullamarine airport and 270 at Auckland airport. Direct comparisons are difficult since the airports have contracted out differing functions. Even so, significant job cuts are in prospect for Sydney Airport.

Staff numbers have already been reduced from 550.

``Auckland and Melbourne are different, but we are in the same business," Mr Moore-Wilton said.

``The organisation structure needs to be focused purely on one asset Sydney Airport."

Before its sale in mid-2002, Sydney Airport was structured to give its owner, the Federal Government, maximum flexibility in terms of possibly being sold via an initial public offering and acquiring other airports. The airport also managed the other airports in the Sydney Basin most notably Bankstown which is no longer the case.

Bankstown, Camden and Hoxton Park airports were separated from Sydney Airport before its sale, and are now subject to a separate privatisation process, which kicks off mid-year.

Some of Sydney Airport's shareholders, most notably Macquarie Bank, are participating in the management review committees which are part of the restructuring of the airport.

Mr Moore-Wilton indicated that since the December 31 balance date traffic at the airport had been soft, with many travellers deferring travel plans due to uncertainties about developments in the Middle East, the drought and, increasingly, the downturn in financial markets.

Sharemarket instability had hurt the discretionary spending plans of self-funded retirees, he said.

``You can't gild the lily: it will have some negative impacts," Mr Moore-Wilton said of the present bout of instability.

``We hope to get this thing out of the way and things will pick up."

* Airlines in trouble, page 38