KEY POINTS:
One of the characteristics Air New Zealand demands of its staff is that they be themselves.
That came easily to chief executive Rob Fyfe in the aftermath of the fatal Airbus crash off the coast of France.
He says the "genuine and human" response among Air New
Zealand staff has helped to galvanise the airline to confront the toughest economic conditions in its history.
"We don't talk about vision or mission or that kind of thing but we do have a character in the company that we do talk about and one of the attributes is to 'be yourself'. There's a lot to be said for being yourself, rather than create a facade."
After the crash, Fyfe was the very public face of the airline, fronting up to the media within just half an hour of confirming the basic details. Trailed by cameras, he travelled three times to the southern French city of Perpignan with relatives of the men who died.
He says it was something he was obliged to do.
"Ostensibly these guys found themselves in that aircraft at that point in time off the coast of France, a job that ultimately they were accountable to me for doing. So you feel a very intense sense of responsibility."
Back at his desk this week at Air New Zealand's Auckland headquarters, he finds the weight of the tragedy is only just starting to lift, replaced by emotional exhaustion.
While in Perpignan he read emails of support from home to relatives and the recovery team. "Invariably I was reading these with tears streaming down my face. When you take on the job as CEO of a reasonably large corporation you don't expect that for a week or 12 days you're going to starting the day crying in front of 40 to 50 people."
Three and a half years into the airline's top job, he found himself in uncharted territory.
"Did it make me less effective not being able to hide that emotion? No. I think it made me more effective and it allowed people to share in our tragedy at the same pace we were."
He was inundated with hundreds of emails but when home it was the response of two men - one a staunch Air New Zealand engineer and the other a stranger in a Dunkin' Donuts - that convinced him he had taken the right approach.
He had clashed with the engineer at an acrimonious contract meeting early last year but in the wake of Fyfe's response to the crash, the engineer approached him to say how proud he was of the airline. The stranger, after establishing Fyfe was the "airline guy from TV", said: "You've got a compassionate heart."
Air New Zealand staff members Brian Horrell, Michael Gyles, Noel Marsh and Murray White were killed along with CAA inspector Jeremy Cook and two unnamed pilots from the German charter airline operating the plane on November 27. The cause of the crash is not yet known.
"A legacy that will come from this tragedy and is a great memorial to those who lost their lives is that the company is a stronger company and there's a greater sense of connection than there's ever been," said Fyfe.
That strength that will be stretched this year. Forsyth Barr research shows profits for the first half of the year could plunge to $36 million, 69 per cent down on the same period last year.
"These are the toughest economic conditions the company has ever faced. You have to think of this in the context of a crisis," Fyfe says.
Already in the past year the airline has seen three years of growth in long-haul operation effectively wiped out by falling demand, particularly in Europe and the United States and, most worrying for the airline, in its lucrative premium cabins.
Overall passenger numbers slumped 5 per cent in December compared with a year earlier.
Around the world, airline profits are plunging and dozens of mainly smaller carriers have gone out of business or are bankrupt.
The country's fortunes to a degree ride with those of Air New Zealand - the biggest operator in tourism, our biggest export business.
Air New Zealand brings in half of all international visitors and spends about $100 million a year promoting New Zealand overseas.
"We're flying routes today that are unprofitable but we fly them because they make sense for us to fly as part of our international tourism network."
Fyfe believes 30 per cent of inbound tourism would be placed at risk if Air New Zealand was not around as it made no commercial sense for other carriers to fly those tourists.
Its place in the broader economy is critical. It employs about 11,000 people and since 2001 the airline has paid just under $300 million in dividends and $200 million in corporate tax to the Government, which spent $900 million bailing it out in the wake of the Ansett debacle.
Fyfe doesn't varnish over the problems his airline faces, or indeed those facing the country, but if they're getting him down it's hard to spot in what has been a consistently upbeat stance.
Since the fuel shocks hit last year and then demand slumped, he and analysts have maintained Air New Zealand is not in a bad position compared with other airlines.
Since being bailed out by the Government the airline's cash position has grown. It now sits on a surplus of $1.3 billion and, crucially, this year it is not committed to any aircraft purchases and has taken a ruthless approach to cutting capacity.
Besides shedding long-haul routes, it has scaled back loss-making services from Hamilton and Dunedin. It also drove a hard bargain with Pacific nations over subsidising services, with the Cook Islands agreeing to pay millions of dollars more a year.
Fyfe believes that in times like this it's good to live by the athletics maxim that the best time to pass someone is when you're running uphill.
"You can make more ground on your competitors in a difficult time than when times are good - that's when it's almost too easy for everyone to be successful."
During the past five years there had been a flood of new entrants into aviation. "There's been plenty of the pie to go around. Now that times are tough it's going to get a lot harder. I think we're about to find out where the really well-run businesses are."
Just how severe the global recession is for Air New Zealand will be revealed around the middle of the year when international bookings start firming up for the New Zealand summer peak season which runs from November to March.
"That will give us a sense of what we're grappling with."
At the moment there are a range of promotions and special deals which are testing just how elastic demand is.
"[But] do you get to a point where no matter where the price is people aren't going to fly and you're going to have to park more aircraft on the ground?"
To operate the airline costs about $100 million a week and on the revenue side bad calls on when to discount fares can cost between $10 million and $20 million a month on a single route.
"We're making those decisions in multiple markets every day so you rely heavily on an awful lot of experience and judgment calls."
The airline has moved from the old system of trying to analyse demand peaks using computer models.
"My approach now is let's just try it and do some trial and error and learn from the reality rather than try and model the theory."
This year will be one of consolidation.
This will include new menus on international flights, changing cabin configurations to meet changing demand and bedding down self check-ins at domestic airports.
Fyfe said the airline would also be looking for business opportunities in this region after last year's purchase of a small-scale engineering business across the Tasman and the launch of a cabin refurbishment business and a wholesale tourism website last year.
"We've got lots going on behind the scenes. It won't be as visible to the public at large but there'll be lots of changes within the business."
