Chief executives and chairs of some major New Zealand companies are bracing themselves for hard decisions to ensure their businesses survive through tough times ahead.
Those I spoke with this week say they are applying a "cool heads but warm hearts" approach. But they are also having to reconfigure their businesses for a commercial world which is expected to be vastly different to that enjoyed before the Covid-19 pandemic began.
Their companies will be slimmer. That not only means job losses, but also more focused businesses. They will have to be more competitive and more disruptive.
Right now, those bosses are having to make these calls under heavy time pressure. They won't necessarily get them all right. Shareholders will have to cut them some slack.
But as Rob Campbell — who chairs SkyCity Entertainment Group, Tourism Holdings and Summerset NZ — told me, "our fundamental responsibility, no matter how much heart goes into it, is to override it and look to the company and the business and focus on fiduciary duties".
There's also no one-size-fits-all when it comes to the issues facing our large companies, as Finance Minister Grant Robertson and his officials are finding out as they tailor assistance, where necessary, to keep those firms afloat to complete projects or maintain vital transport links.
Robertson has not disclosed which companies are currently in the frame.
But Fletcher Building chief executive Ross Taylor — whose company is among the large businesses consulting with Government — expects to engage again with Cabinet Ministers and officials this weekend. The Fletcher board met on Tuesday evening to discuss some exciting disruptive technologies which Taylor had hoped to introduce from the US.
Instead, directors were confronted with closing many of Fletcher's businesses within 48 hours. Fletcher later withdrew its full-year earnings guidance of $515m-$565m (before interest and tax), cancelled its interim dividend payment and suspended its share buyback programme.
The board made a decision to "keep the company whole" until Friday, April 3, so directors had time to think it through and make tough decisions on the firm's cost structure.
As Taylor puts it: "It's very unsettling personally. If you look at the drama around the world, I'd be lying to say everyone was relaxed. The strategy was to try to give breathing space and kick the tyre down the road and pay everyone to April 3. And stay semi-sane at this stage."
Taylor might have chosen code words for job losses. But the decisions in front of his board are complex. The company has 10,000 employees and even with the Government wage subsidies, cash reserves are under severe pressure and they will be exacerbated if the current four-week Covid-19 lockdown is extended.
Like Fletcher, Air New Zealand is also confronting the harsh reality that its revenues have fallen off a cliff and that the airline of the future will be much slimmer.
It may be that Air NZ — which chairwoman Dame Therese Walsh says will come out of this crisis as a domestically focused airline with an international freight component — will be one of just 40 or so "major" airline survivors worldwide.
The Government has guaranteed loan finance of up to $900m at an 8 per cent interest rate.
Directors of the 52 per cent Government-owned national flag carrier are now concentrated on the stark reality that forecast annual revenue is down 90 per cent on the pre-Covid-19 annual revenue forecast of around $5.8 billion. Air NZ's annual labour bill is $1.3b, or just over $100m a month. Aircraft annual lease costs are about $400m and property and building leases around $70m.
It is obvious that even with its $900m loan, the airline is in a major cash burn and will require recapitalisation.
New Zealand's largest bank, ANZ, is in a different space.
ANZ chief executive Antonia Watson is working with the Ministry of Business, Innovation and Employment on term sheets so that businesses can be lent more under the recently announced Government-guaranteed loan scheme.
Again, this is not a simple task, as officials and bankers alike cannot divine how long the crisis will last and how long businesses will be locked down (and hopefully not locked out).
Watson says ANZ has passed on the Reserve Bank's OCR cut and removed some fees to assist personal customers. It is also paying suppliers within two days of notice instead of their normal terms. Loan deferral options are expected from Monday.
But she makes the point that at the big end of town it is a slow burn.
Other companies deemed "essential services" have also watched revenue disappear — including news media.
Ironically, NZME's intensive coverage of the Covid-19 crisis has seen its audience numbers soar to "absolutely record levels", with visits to the NZ Herald website now up by 2.5 times. Says NZME chief executive Michael Boggs: "There is an insatiable demand from people to be kept informed. But at the other extreme, revenues are substantially down".
He says NZME is "absolutely accepting" the Government's wage subsidy. But the business will need to be resized.
Boggs was not prepared to entertain a question on whether NZME's plans to acquire rival Stuff were still alive. Nor another question from this columnist as to whether NZME should apply to the Commerce Commission under its "failing companies" provision to acquire its long-term competitor.
SkyCity's Campbell says the group's businesses' revenue has fallen to nil with the lockdown. The effect will be pretty immediate for casual workers. But, says Campbell, for others the company is doing everything it can to maintain employment.
"Depending how long the closedown occurs, we want to maintain in place an effective business."
These reality checks I've made with some of our larger company heads underline just how precarious things are and why we must all do our bit to ensure the Covid-19 lockdown works. The prospect of widespread financial carnage has to be averted.