Air NZ's chief executive Greg Foran started in the job on February 3. Photo / Michael Craig
Air NZ's chief executive Greg Foran started in the job on February 3. Photo / Michael Craig
Air New Zealand chief executive Greg Foran says there will be an announcement on new funding within a week.
The airline is in talks with its 52 per cent Government owner and Foran said like any loan it will need to be repaid. The size of any package isn't knownbut former chief executive Rob Fyfe estimates the airline - at its current size - needed about $450m a month to keep running.
Transport Minister Phil Twyford today announced where almost half of the $600m aviation support package will go – largely covering government fees and keeping air traffic service provider Airways operating.
About $163m will go to airlines to pay passenger-based charges used to help fund the Civil Aviation Service, Aviation Security Services, Customs, and biosecurity. And another $37m of support will cover fees paid to state-owned service Airways.
The Government will freeze any price hikes by agencies that charge fees at the border, and will also throw $70m behind Airways.
''I am hopeful that we will have something to announce within the week. Like any loan it will need to be repaid and the faster we can achieve that the quicker we can innovate and drive our business forward,'' said Foran who has been in the job for just over six weeks.
The airline's revenue is drying up due to travel restrictions and plunging demand. Foran said it was ''winding down'' international flying.
International capacity has been slashed by 85 per cent and the number of domestic seats could be cut in half.
The airline is in the process of laying off up to 30 per cent of its 12,500-strong workforce.
Foran said the impact of Covid-19 was frightening.
''I can feel the upheaval, I can see it and I am experiencing it, just as you are. It is more than unnerving; it is at times frightening. However, we have strength within our network of colleagues and family.''
The veteran of 41 years in retail, including heading Walmart in the United States said this was the most difficult period he had ever seen or experienced.
''As an All Blacks supporter, this feels to me like a test match. They usually are very tense, difficult times that test you. I just wish it was over in 80 minutes. But it's not and we must instead steel ourselves for our 'test match'.''
It was undoubtedly now the most challenging and disruptive period aviation has experienced around the globe and Air NZ was not alone.
''Almost hourly we are dealing with changes to borders; more advice on actions, changes to schedules and customers and staff requiring help. But we will prevail. We will continue to operate, albeit in a much reduced and different manner and then we will emerge, a little battle-worn and hardened, but importantly stronger and fitter.''
Earlier this week he met with the leaders of the four unions representing more than 8000 staff to discuss how the airline could work even more collaboratively to reduce its labour cost base.
''The spirit and candour of the conversations was outstanding.''
Air New Zealand has activated a crisis centre at its Auckland headquarters. Photo / Alex Robertson
Unions E tū, NZALPA, AMEA and the Federation of Air New Zealand Pilots were working with managers to minimise the number of roles going from the airline to match the ''new capacity reality,'' for whatever period of significant disruption lay in front of the airline.
Foran would meet again with the leadership of the unions tomorrow.
''I am confident that we will find some alignment and be able to move quickly to then communicate more detail on options to reduce our labour costs by up to 30 per cent with all Air New Zealanders, whether in collective or individual employment agreements and across all areas.''
Salt Funds managing director and portfolio manager Paul Harrison said the funding could be by a rights issue.
''The size of which will be determined by the extent to which Air NZ can reduce its day to day operational losses and reduce its capex requirement and then the estimation of the timeframe,'' he said
He said the $885m government bailout in 2001 could provide some guidance.
That consisted of a $300m loan and buying $585m of new shares.
''So maybe we get a rights issue that the Government participates in and then the Government also provides a loan on top,'' said Harrison.
The loan was converted to equity in 2005 following a $186m rights issue the previous year when the government bought another $150m of shares to give it 80 per cent ownership.
