Fyfe tipped to stay at Air NZ helm

Air New Zealand chief executive Rob Fyfe is tipped to remain in the top job for at least another two years as the company heads into a profit sweet spot.

The airline will announce its annual result for the June year today.

Mr Fyfe has been with the national carrier for seven years and took over the helm in October 2005, replacing Sir Ralph Norris.

Analysts have interpreted a decision by head of international airline operations Ed Sims to leave as an indication that Mr Fyfe will remain in office for the immediate future.

It is understood Mr Fyfe wants to press through the initiatives that will drive a step change in profits in 2012.

That includes the introduction of a new fleet of five Boeing 777-300ERs which start arriving from November this year and a possible trans-Tasman alliance with Virgin Blue.

Mr Sims is highly regarded among his peers and was considered a front-runner for the top job at the airline.

"He is one of the key people behind a lot of the changes that have been made," one analyst said.

Mr Sims oversaw the development of the next generation cabin interiors, including the world's first economy seat that can convert a row of three seats into a double bed. These will feature on the 777-300s.

"But Rob is sitting there thinking: `I've got the Rugby World Cup next year, I'm going to be here for that'," a source said.

"And then `I have got a huge improvement in earnings in 2012, and I'm going to be here for that'."

Mr Sims' decision reflected a need to find a chief executive role, possibly in Britain, rather than waiting for someone in front of him to move on, the source said.

It was possible that Mr Sims would eventually return to replace Mr Fyfe.

Another indication that Mr Fyfe would stick around is his personal long-term incentive scheme which requires him to remain at Air New Zealand till September 2012 to reap any benefits.

Mr Fyfe was granted nearly 5 million Air New Zealand options in 2008 at 19.5 cents each as part of his remuneration scheme. The options are valued at $960,000.

He must meet his performance targets, and the airline's share price must outperform the New Zealand sharemarket and the global airline industry benchmark to take up the share options.

That was a tough hurdle given that airlines historically under-perform the market average over the long term.

However, analysts said Mr Fyfe had positioned Air New Zealand to take advantage of a return in demand as the global economy recovers over the next year.

Some analysts are forecasting the airline's profits will more than double to about $230m in 2012.

Mr Fyfe's base salary has been frozen at $1.2m since 2007.

- © Fairfax NZ News