Air New Zealand CEO Greg Foran will be handing over the reins to his successor in just two months. How does he feel about the airline's performance? Photo / Michael Craig
Air New Zealand’s chief executive says airlines big and small are under pressure from airports and others, who keep squeezing as much money as possible out of carriers.
Greg Foran was offered an extra $900,000 to stay at the airline in a “CEO retention plan” but opted to leave, giving notice in March.
Today, Foran said he was satisfied with the airline’s latest result in the face of a sluggish domestic economy and high inflation.
“In what are some pretty interesting conditions and continue to be, I’m very pleased with delivering the profit that we have, $189 million pre-tax,” Foran told the Herald.
Net profit was $126m after tax, down from $146m the year before.
Foran has about two months left in the job.
He’ll then hand over to current chief digital officer Nikhil Ravishankar and said he was focused on a smooth transition.
A key challenge was a lethargic domestic economy.
“We’re in a discretionary business. People don’t have to fly.”
He said companies, government agencies and individuals were cutting back.
That might not mean taking the bus instead of the plane from Auckland to Christchurch, but travelling between cities less often.
He said passenger numbers for the second half of the 2025 financial year showed ongoing challenges.
“You’re seeing Government down 10%, corporate still down 5%, and actually leisure was also down 5%,” Foran said this morning.
“It is a challenging domestic environment and people are doing it tough. Not everyone. I think if you’re a farmer, if you’re living in central Otago, probably you’re feeling okay about things, but for the majority of the country, it’s challenging.”
Foran said the airline was experiencing cost inflation far beyond consumer price inflation.
Airlines in the past year have raised multiple concerns about rising airport, air traffic control and aviation security costs and levies.
Foran said the airline was focused on controlling the costs it could control.
“If you are in an industry that can pass costs on, then that’s exactly what you do. If you’re in an industry where it’s difficult to do that because your volume will fall, then you have to rethink how you operate.”
He said Air New Zealand this year would spend about $417m on airports.
“So if you’re running an airport, for example, and this is all airports, including international airports, their costs to us at Air New Zealand between 2019 and 2025 has gone up by 57%.
In contrast, the Reserve Bank inflation calculator shows inflation of 27% since the start of 2019 and 25% since the second quarter of 2020.
Foran pointed out regional airline Originair ditching its Hamilton-Palmerston North service and the ongoing challenges facing Sounds Air.
He said an aviation system where all costs were passed on to airlines would inevitably mean fewer people flying and businesses cutting travel budgets.
“You could be operating the airport. You could be operating security, you could be a port, you know, where else are you gonna berth your ship? Where else are you going to land the plane?
“You can simply say, well, I’ll tell you what, I need to make some more money, so let’s put the costs up.”
But he said a positive development related to labour costs, which were consistent with consumer price inflation.
“And then, of course, all the stuff we’ve been doing, whether it’s building a new hangar, whether it’s rolling out new automated passenger rebooking. These things, by the way, help reduce our costs.”
And in terms of what the airline could control, Foran said new catering systems and a new loyalty system were progressing.
He expected the airline to take delivery of two new Boeing 787s with General Electric engines in March.
The airline retrofitted the 787 Dreamliners, unveiling the first refurbished aircraft in May.
“We’ve got four of those up and running now. They’re not cheap. But the product we were running on those was 25 years old in terms of design and our customers are just loving the new fit-out of those planes.”
A major problem for the airline has come from engine maintenance issues.
Those relate to Pratt & Whitney’s engines for the Airbus A320 and A321neo aircraft and the Rolls-Royce Trent 1000s on Dreamliners.
“I’m personally involved in it and obviously, Nikhil will be stepping into the role imminently, so he’s been with me as we get personally involved at the highest level with those discussions.”
Foran said Rolls-Royce and Pratt & Whitney had both underestimated what it would take to get on top of the situation.
“They don’t have the same engines and they don’t have the same problem. They’re still optimistic that things are going to come right quickly,” he added.
“My experience has taught me that it will take longer still than what they think, but what I can tell you is that there is a fix.”
Foran said the airline aimed to get more frequent flights to New York City and to restart services to London.
The airline stopped flying from Los Angeles to London in 2019 and more recent engine issues had put the airline’s Auckland to Chicago service on hold.
Further down the track, Foran said India should be an Air New Zealand destination.
Jarden analysts said today’s result was in line with expectations but weak, highlighting ongoing pressures.
Jarden said the $189m pre-tax profit was near the top end of the $150m-$190m guidance range from an April trading update.
“The result includes $35m of Covid credit breakage and $129m of engine compensation – broadly in line with previous guidance,” the analysts added.
Foran told the Herald with 20% of the fleet grounded, a tough domestic economy and inflation, today’s result was good.
“I like our plan. We’re making good decisions. We’re doing the right thing. I wish the economic conditions were a bit easier.
“I wish we had some more engines. But [with] the things we can control, the team are doing a very good job, and we are building an incredibly resilient, safe, and customer-focused airline for the future.”
John Weekes is a business journalist covering aviation and courts. He has previously covered consumer affairs, crime, politics and courts.