This time, two years ago, Air New Zealand released its first financial result that mentioned Covid-19.
Chief executive Greg Foran had been in the job for less than a month and during that time the airline had suspended flights to Shanghai and Seoul and reduced capacity to Hong Kong and Japan as the virus spread.
The company had just posted half-year profit of $101 million and said it expected to take a $35-75 million hit from Covid-19.
A few weeks later, the World Health Organization declared the Covid-19 outbreak a pandemic and, as countries closed their borders in a bid to keep the virus out, the aviation industry world collapsed.
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Air New Zealand has been hit hard with revenues plummeting from $6 billion to $1 billion and its network reduced by 95%. It wrote off an entire fleet of planes and laid off more than 4,000 of its 12,000 employees.
But the Crown’s 52% stake provided a safety net for the national carrier, with the government stepping in early with a $900 million loan, which has since grown to $2 billion.
Forsyth Barr analysts Andy Bowley and Matt Noland said in a research note that Air New Zealand would report a “significant loss” when it reports first-half 2022 results on Thursday.
They expect it to include a dip in passenger revenue due to border closures and Auckland’s prolonged lockdown.
They estimated the company would report an underlying after-tax loss of $131 million, but said there was a higher margin of error than usual with Air New Zealand.
They recently said they expected the airline’s pre-tax loss to widen to $791 million for the year to June, following its $440 million pre-tax loss the year before. last year.
They also expect Air New Zealand’s planned capital raise to require $1 billion to $1.2 billion in new equity.
For Foran, leading Air New Zealand through a pandemic is a world away from his previous role as US chairman of Walmart.
Cathy Hendry of Strategic Pay, which tracks executive compensation, said that by joining the company, Foran expected to continue to grow an airline that benefited from a booming tourism sector.
“I don’t think anything would have prepared him for the shock of Covid,” Hendry said.
“I imagine his expectations of reality were very different.”
She said running an airline would have been completely foreign and quite complex for Foran, whose previous experience was in retail.
She said Foran rose to the occasion and did his best given the circumstances.
“The proof will be in the pudding in a few years, depending on how the balance sheet looks.”
New Zealand Air Line Pilots’ Association (NZALPA) chairman Andrew Ridling said Foran was a genuine leader who was willing to take guidance from anywhere in the business, which is why he was seen often work alongside frontline Air New Zealand staff.
“I remember the first day he was on the job, he was cleaning airplanes,” Ridling said.
“He wants to hear those voices.”
He said Foran was the right person to lead the airline through the Covid-19 crisis, and it was about “come hour come man”.
“Sometimes I think you have the right person, at the right time, in the right position, and I think we were very lucky to have Greg at the right time.”
Foran was a people person who focused on customers and staff, he said. He was calm in a crisis, honest and thought things through carefully before making a decision, he said.
“He deals with the facts and tells you how it is.
“He gives you the unvarnished truth.”
Ridling said he also had plenty of time for Foran’s predecessors Christopher Luxon and Rob Fyfe.
“But none of them have had to deal with the crisis that Greg Foran is going through.
“I would say he’s had to draw on all the skills he’s learned over the years in every business he runs.”
On several occasions, Foran mentioned in media interviews that in times of crisis, it was important to “slowly panic”.
Ridling suspects he learned about it at Air New Zealand.
“It’s really the saying of a pilot. In an emergency, the first thing to do is wind up the clock.
Aviation commentator and former Air New Zealand director Irene King said an aviation background was not necessary to run Air New Zealand.
“What you need is someone with tremendous diplomatic skills,” King said.
Years of preparatory work at Air New Zealand had been done before Foran began convincing “governments of all persuasions” to step in and support the airline, she said.
Air New Zealand has been largely constrained by the government both in terms of finances and the operating environment, she said.
Any tension between the airline and the government had been handled by Foran with “class and style”.
“It very clearly demonstrates his ability.”
King said it would be incredibly difficult to operate in an environment where the government’s response to Covid-19 meant it changed policy all the time.
“It’s a terrible environment to run any business, let alone aviation.”
She said that in the public domain, Foran got along well with New Zealanders and had a relaxed and friendly demeanor when speaking in public.
“He comes across as a nice Kiwi. It’s a good image for the company.
He seemed “elegant,” but not arrogant, and was more approachable than previous CEOs, King said.
“He sums up the business man par excellence.”
Her tendency to work alongside Air New Zealand staff in all areas of the business also presented a good image, she said.
“He’s getting out there and he’s working on the front line, which is fabulous for morale and fabulous for customers as well.”
However, King believed that customers who had credit with the airline due to canceled flights had been let down under Foran’s direction.
“I’m quite surprised that consumers are so passive.”
Customers should have more control over flight changes and credit, and the airline’s customer focus had slipped during the pandemic, she said.
“I would say their performance is absolutely dismal.”
Foran deserved credit for Air New Zealand recently receiving the award for the world’s safest airline, despite the airline operating only a fraction of the flights it was operating before Covid, said King.
“It’s actually quite tricky when you’re in this start-stop scenario.
“It presents real challenges, and they handle those challenges superbly.”
Air New Zealand customer Christopher Walsh of MoneyHub said the situation regarding canceled flight credits and airline refunds had been “a debacle”.
“With the borders still closed, it’s unclear when those big international credits will be used, which is an ongoing frustration for many,” Walsh said.
Innovations at Air New Zealand had been rare during the pandemic as the airline sought to save money, he said.
However, he said he was impressed that the airline had continued to roll over Airpoints status to cover travel until 2023.
He said domestic fares remained good value if booked in advance, and it was nice to see some lounge improvements continuing.
“The everyday passenger, I would say, is happy and pays a fair price.”
E tū aviation union leader Savage said Foran was more approachable and had more direct contact with personnel than Luxon.
Foran had also taken the time to meet more regularly and directly with union leaders to talk about the state of the airline, he said.
The change in leadership style was well received by E tū members, he said.
“It’s no secret to Greg that E tū disagrees with the way Air New Zealand has handled the redundancies under his leadership and several other aspects of how they run the airline,” said Savage.
“However, he is willing to listen and discuss criticism, which allows for more honest and open engagement.”
It gave the union confidence that Air New Zealand could be a decently paid workplace “where the opinions, skills and development of workers contribute to its betterment”, he said.
Air New Zealand still had hundreds of workers who were paid minimum wage or thereabouts, he said.
“There is still a long way to go in our view to resolve these issues.”