Z Energy will decide whether to apply for a government wage subsidy next week, chief executive Mike Bennetts said today.

The firm, the country's largest fuel seller, would easily have qualified for the subsidy with revenues "well within thresholds," he said.

It could have received about $3.5 million for its corporate employees, but the firm also needed to consider its brand and its reputation.

"Should a big company be doing this, given how some people react to the fuel sector?" he said on a Trans-Tasman Business Circle webinar.


"So there are other considerations at play; it's been a difficult decision."

The government has so far paid out more than $10 billion under the 12-week wage subsidy scheme to help protect the jobs of about 1.6 million workers. But there is growing disquiet at the size of some of the firms claiming the subsidy, particularly those in sectors that were able to continue trading profitably during the five-week lockdown.

Z Energy, which operates the Z and Caltex retail chains and is a major jet fuel supplier, has seen its service station volumes fall by about 80 per cent while jet fuel prices are down almost 90 per cent.

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The firm employs about 500 staff directly and another 2,200 at 200 franchised sites. Earlier this month, it cut its profit guidance, withheld $75m of dividends from shareholders, and said it was deferring much of its capital spending.

It has also instituted a number of cost saving initiatives including a 'sinking lid' policy on its full-time employees. It will also forego $8m in staff bonuses.

Bennetts said Z was also unique in its response to the crisis in that it was both a landlord and a tenant.

"We needed to determine how we deal with our tenants. So we have supported a number of tenants who are unable to pay us."

He said it was a similar story for customers who have in many cases been granted payment extensions.


The company made headlines earlier this month for forgiving the St Johns ambulance invoice for the month of March.

"It is about determining what your values were when times got tough despite the fact that not everyone is performing at top level now," Bennetts said.

"I'm sure if you put a reading on me I wouldn't be at 100.

"But as business leaders we are in a privileged position so we are the ones that will dictate what happens out of lockdown, into recession and then how we emerge on the other side."

Fuel prices

Bennetts said the company had been very mindful of fuel prices at the pump, though people needed to understand there was a government imposed tax floor of about $1.00 a litre through the country and $1.15 in Auckland.

One area that would need some attention was in the area of tourism, he said, noting that the jet fuel sector took seven years to recover after the global financial crisis in 2008.


One positive was that airlines would be paying about one-third of pre-Covid fuel costs, and he didn't expect oil prices to go above US$40 a barrel for the next two years. Brent crude was recently at US$20.60 a barrel.

The negative slant to a low oil price, however, was that there was would be less incentive to invest in alternatives to fossil fuels. The scarce capital that was there to invest in it "may not be there given the challenges that sector is also facing," he said.