CEO Wants Air New Zealand To Run Like A Swiss Watch

Yesterday, Air New Zealand held its 2022 Annual Shareholders’ Meeting in Auckland. The day before, it had advised the New Zealand Stock Exchange it expects earnings for the first half of the 2023 financial year (July 2022 to June 2023) to be in the range of NZ$220 million to NZ$275 million ($130-$162 million). This follows a loss of NZ$725 million in the financial year ending June 30, 2022. The figures for the earnings and losses are before taxes and other significant items.

In a room full of shareholders hoping to see a dividend, losses from 2022/23 were mainly dealt with by the Chairperson, Dame Therese Walsh. Since border restrictions began relaxing in March, Air New Zealand (ANZ) has quickly ramped up its capacity to meet the growing demand for domestic and international travel.

Capacity is at 70% of 2019 but growing

Air New Zealand’s Boeing B787-10 Dreamliners are expected to begin arriving in 2024. Photo: Air New Zealand

The airline expects total flying capacity for the 2023 financial year to be 75% to 80% of pre-COVID levels. Capacity is currently around 70% 0f 2019 levels, and with strong forward bookings, it expects to be profitable from July to December. The fuel price is a big unknown, and the airline’s profit forecast is based on an average jet fuel price of approximately $130/bbl.

CEO Greg Foran said that the airline has focused on customers by restoring services, maintaining a choice of fares and using innovation to improve their journey. He said:

“We’re focussed on running the airline like a Swiss watch, with safe, efficient operational performance and building a rewarding place to work, with an uncompromising focus on keeping staff and our customers safe. We are rebuilding as a stronger, more nimble airline, and we’re confident we have the right strategy and the right team to deliver for all New Zealanders.”

Much of the attention at Air New Zealand has been on the new route from Auckland Airport (AKL) to New York JFK Airport (JFK), the first new route the airline has launched since 2018. That is now running to a three times a-week schedule, although Foran said they are looking to add more services as the route develops. One of the attractions of this route is the simple connectivity to Australians wanting to get to the east coast USA and avoid the dreaded transfers in Los Angeles. Most of the international network is now in place, with the final US route from Auckland nonstop to Chicago O’Hare International Airport (ORD) recommencing on October 30.

Single widebody type for premium leisure

Air New Zealand’s Economy Class Skynest offers passengers the opportunity to stretch out and get some sleep. Photo: Air New Zealand

Continuing the theme, Foran also spoke of the new cabins on Boeing B787 Dreamliners due to arrive in 2024, including the innovative Skynest for economy passengers and Premier Lux for business class. According to ch-aviation.com, ANZ has six B787-10s and two B787-9s on order, adding to the 14 B787-9s in the current fleet. Foran said:

“We’re shifting the focus of our international network, doubling down on the locations we know customers want to fly to and offering better schedules. Our aim is to have a single widebody fleet focused on premium leisure customers and cargo in the Pacific Rim, and the launch of our nonstop service to New York builds on this.”

Sustainability was part of Foran’s address, describing it as the “biggest challenge facing the aviation industry.” ANZ is totally committed to its net zero emissions by 2050 goal, and its first delivery of sustainable aviation fuel has arrived in New Zealand. The airline is working with the NZ government to determine how sustainable fuel could be produced locally.

It is also engaged with manufacturers and start-ups on future hybrid and electric aircraft, particularly for its extensive domestic networks. At this point, we should spare a thought for the chairperson, who had the task of telling the expectant shareholders that the board was not paying any dividend until profits were sustainable.

With the nonstop Auckland-JFK service now in full swing, it would be great to hear from anyone who has flown it.