Air New Zealand tells Government to back off after Shane Jones' criticism

Christopher Luxon, right, has defended Air NZ after Shane Jones', left, criticisms. Photos / File

Air New Zealand has taken the unusual step of spelling out to the Government the commercial relationship it has with the Crown after sustained attacks of its approach to the regions by cabinet minister Shane Jones.

The airline has written to Finance Minister Grant Robertson, who represents the government's 51 per cent stake, and told him it will always act independently.

"Any appearance of a lack of commercial independence is viewed seriously by the Air New Zealand board and is ultimately potentially damaging to the interests of all shareholders, including the Crown.''

And the airline's chief executive Christopher Luxon said despite clear ''terms of engagement'' there could be a misunderstanding about the Crown's stake and what it means.

"The Crown has the same rights as any other shareholder. That doesn't mean they can dictate the operations of the company, they can't use their majority shareholder position to make the company make non-commercial decisions," Luxon said.

"Decision making is with the company board and the Treasury expects all those decisions to be commercial."

In the wake of the axing of services to Kapiti, Regional Economic Development Minister Jones has said Kiwis in the regions got better treatment from second-hand car dealers than Air New Zealand, and has issued a call to arms for regional mayors to save provincial flights.

Luxon said the attack was unfair. Although the airline also pulled out of three other towns in 2014, its overall capacity in the regions had increased by 12 per cent and prices had fallen by 8 per cent since.

"I think those (Jones') comments are really unfair. We are incredibly proud of what we do in regional New Zealand."

Luxon said the fundamental relationship with the government was in good shape.

"Clearly it's a coalition government and there will be different views. The reality is the core relationship is very strong."

Canning services to Kapiti was part of a plan to improve its overall network.

"We know that regional New Zealand has higher expectations and there's more we can do to make the network more reliable in the face of storms and massive amounts of growth we've got going on."

Jones' attack follows questions New Zealand First leader Winston Peters raised about the airline's backing of the visit by former US president Barack Obama.

Asked if there were politics in play over the presence of former National Party prime minister John Key on the board, Luxon said he didn't believe that was the case.

"Sir John has been a great director and he's bringing us alot of insight, alot of global perspective."

The airline has been run along fully commercial lines following its recovery from near collapse and a taxpayer bailout in 2002.

Aaron Gilbert, associate professor of finance at AUT Business School said the comments by Jones had the potential to be extremely disconcerting to small investors in companies where the Crown owns 51 per cent.

"Any pressure by the Government on companies like Air New Zealand and the energy companies to pursue non-commercially focused Crown objectives at the expense of commercial decisions will hurt the dividends and share price of those companies," he said.