Greg Foran: outgoing Air NZ CEO on the airline's profits dropping

The boss of Air Zealand says he's proud they've made even two cents of a dollar this year - as profits drop 13.7 percent. 

The airline's being hit hard by a sluggish domestic economy, with costs like landing charges, wages, and engineering material rising much faster than inflation.

Outgoing CEO Greg Foran says he appreciates it's been a difficult few years. 

"Whether it was starting when Covid began and doing capital raises and then hurriedly having to restart the business, and then a parade of engine challenges and now we've got a few other headwinds - but you learn."

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Episode Transcript

Speaker 1 (00:00):
Greek Forren has delivered his final profit as the boss
of Air New Zealand before he leaves in a couple
of months time. The airline offered him an extra nine
hundred thousand dollars to stay on, but he decided to
leave anyway. In New Zealand made an annual net profit
after tax of one hundred and twenty six million dollars.
That is down fourteen percent on the year before, and
Gregor is with us. Hello, greg Hi there, how are you?

Speaker 2 (00:19):
I'm well?

Speaker 1 (00:19):
Thank you your final result, but as sweet.

Speaker 2 (00:22):
Yes it is. You know, I've been almost six years
at the airline and been incredibly enjoyable. So bit sad
leaving a number of people in a few weeks time,
but also excited for Nickel and his opportunity and also
for the rest of the team. Yeah do you.

Speaker 1 (00:40):
I mean, it's been a tough industry to be in
the last few years. It probably couldn't have been worse.
Are you happy to put it behind you?

Speaker 2 (00:48):
Do? You know? As you reflect on these things, you
always learn more when it's hard than when things are easy.
So I do actually appreciate the fact that it has
been difficult, and you know, whether it was starting when
COVID began and doing capital raises and then hurriedly having
to restart the business and sort of a parade of

(01:09):
engine challenges. And now we've got a few other headwinds.
But you learn. And I would say to you that
I'm proud of what we've done and what we're doing
and the way we're setting ourselves up.

Speaker 1 (01:20):
So why are you leaving?

Speaker 2 (01:22):
Well, I've got another, you know, itch that I need
to scratch in terms of what I want to do,
and I can't share anything about that at this stage.

Speaker 1 (01:30):
So there is something here. It's not just lying in
the sun.

Speaker 2 (01:33):
No. And secondly, if you've got succession in place at
a point in time, you need to let people get
on and do that because otherwise you stand the risk
of losing them.

Speaker 1 (01:45):
Can you at least tell us if your etches locally
or overseas?

Speaker 2 (01:48):
I can't this stage. I'm sorry.

Speaker 1 (01:49):
We heard the rumors.

Speaker 2 (01:51):
I've not heard any room or too busy.

Speaker 1 (01:55):
The rumors are either that you're the new Rugby boss.

Speaker 2 (01:58):
I've not heard that rumor.

Speaker 1 (01:59):
And as I said, so we can scratch that one off,
can we?

Speaker 2 (02:02):
I have no knowledge of anything.

Speaker 1 (02:05):
Now, listen, profit down this year profit down last year,
When does it turn around? Do you think?

Speaker 2 (02:10):
I think we're in for another challenging year this year,
to be honest, so perhaps the year after, but it's
going to be tough this year. Is it the difference
different set of circumstances. We're still dealing with engines. We
don't expect any significant improvement there, and we've said, you know, look,
we came in at one hundred and eighty nine pre tax.
We would have done another one hundred and sixty five

(02:31):
million on top of that if we could have flown
what we wanted to. We ended up flying less than
what we did the previous year, which is never what
you want to do, but that's what happens. The economy
is still pretty tough out there domestically, and you know that,
and your listeners know it, our customers know it. So
we're dealing with that, and we're seeing that with sort

(02:54):
of less government spend, less corporate spend and even leisure travel.
Domestically is still pretty tough. But the other thing that
we're leaning into is we get a fair amount of
inflation coming our way, and inflation that you would expect
on things like spare parts comes our way. And it's
been forty percent over the last five years, but it's
ten percent again on top of that this year. But

(03:16):
then we're seeing other services that we get and that
could be CIA Airways, airports. If I just took those
three that the airports, a CIA, av SEC and airways,
that's laid in eighty four million dollars worth of cost
for us just this year. So we're going to work
out how to become more efficient. We're doing some of that,

(03:37):
lots of things that I could talk about, but as
well as that, we absorb a bit and you can
see that in the profit result and then of course
you do have to pass some on.

Speaker 1 (03:46):
Yeah, so do you have I mean, as a guy
leaving and leaving an industry where it is really tough
to the point that we have regional airlines asking for help,
what would be your advice to the government to help them?

Speaker 2 (04:01):
Well, I would look a field and say what do
you see happening elsewhere? And you know, if I look
at Australia, twenty seven to twenty eight million people, two
airlines and they struggle to make a regional airline work.
Example REX, So I think REX recently got about a

(04:23):
fifty million dollar bailout by the Australian government in order
to keep flying two locations. Similar sorts of things happen
in the US. If I look in places like Finland
and Sweden, I see that happening. If we want airlines
to operate in really remote locations, they're going to need

(04:44):
a hand. And that hand could come by having a
look at the total ecosystem and saying how do we
deal with all the costs that are in that ecosystem,
and or it could be some type of financial assistance.
It's tough running an airline, you know, they are really

(05:05):
capital intensive. We've made this year two cents and a dollar,
and I'm actually proud of the result. We had to
work really hard to do that. We've tried to keep
fears reasonable and at the end of the day, two
cents in the dollar and we've still got to buy
new planes. You know, we've got two new Boeings coming
in the beginning of next year. You don't get much

(05:27):
change out of two hundred million dollars for each plane.

Speaker 1 (05:29):
Well, I'll tell you what if I was you, I'd
be very happy to leave two cents and a dollar
behind and go to greener pastures.

Speaker 2 (05:35):
Tell me.

Speaker 1 (05:35):
If you're not going to tell us what you're doing,
are you at least going to get a break before
you do it?

Speaker 2 (05:39):
Look, that will depend on what I end up doing,
and I haven't decided yet. So maybe my wife loves me,
but she also loves me outworking.

Speaker 1 (05:51):
Says every wife.

Speaker 2 (05:52):
Greg.

Speaker 1 (05:52):
Thank you very much, Greek for in New Zealand's chief executive.
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