Oliver Mander: NZ Shareholders Association spokesperson on Air NZ downgrading earnings expectations

Air New Zealand says it now expects to make a first-half loss of about $30 million to $55 million, before tax.

It's just provided a trading update to the NZX.

The national carrier says it expected a two to three percent uplift in revenue across domestic and US-bound bookings.

However, this hasn't materialised and isn't evidenced in future bookings.

NZ Shareholders Association head Oliver Mander says the engine issues and ongoing economic downturn are the main factors behind these changes. 

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Episode Transcript

Speaker 1 (00:00):
Now in New Zealand's new chief executive has been in
the job for what three days, and already has had
to deliver bad news to shareholders. The company has downgraded
its first half earnings expectations from a thirty four million
dollar profit forecast to an up to fifty five million
dollar loss. Oliver Amnder is the chief executive of the Shareholders'
Association and with US now Hi Oliver, Good evening, Heather,

(00:20):
Is this just a case of really bad luck with
the domestic recession in the US competition and the engine problems.

Speaker 2 (00:27):
Well, that's a pretty good summary of what's really been
impacting them, Heather. But look, these things it's the outcome
of some decisions made a long time ago, as is
the long term nature of the airline business. But yeah,
they're really suffering because of that sort of week domestic
economy and New Zealand. The engine issues are hitting them
hard and then really unfortunate for them. Thing is for

(00:50):
them that they are working hard to preserve their what
capacity they can on their key routes and their key
hub in Auckland, but that's not necessarily helping them actually
rebound in terms of the growth that's occurring in the
wider airline sector. So we are seeing Quantus, for example,
utilize their capacity to actually challenging New Zealands and key routes.

(01:11):
And yeah, so that they're they're ruined that the cost,
the long term cost of those engine issues and the
lack of capacity that that's giving them, and that's really
showing up in these results.

Speaker 1 (01:20):
What are these decisions, these decisions that were made a
while ago that you were referring to.

Speaker 2 (01:24):
Or just in terms of the and this isn't anyone's issue,
but it's just those decisions that are related to the
plane selection, engine selection and then how that's played out
in the longer term.

Speaker 1 (01:34):
Yes, do you have any concerns about the way the
business has been run in recent years? Such as I
don't know, No, I'm asking you. I mean, if it
is just a case of like a series of unfortunate
events that have happened to them, then that is just
what it is. Is there anything about the way that
it's been run that you are worried about or is
it simply the bad luck?

Speaker 2 (01:56):
I think they've been hit by a perfect storm of events.
And whether you call that luck, it probably is more
luck than actually decisions that they've made to themselves, and yeah,
and that's not been great, great outcome for shareholders. They Yeah,
that they have suffered from that lack of capacity that's
hinted their growth and hindered their ability to actually create
some great results. But I think this a little long

(02:16):
term impact of this. You know, they have been losing
out in terms of the capacity that they've been able
to provide on those key routes, and there's a long
way to come back from that. Yeah, and obviously as
competitors have filled that space in New Zealand is effectively
lost market share. I think will be really interested how
that long term, how that long term resolution.

Speaker 1 (02:36):
Which is to say that it's not going to be
a quick face. This is a long battle that they've
got ahead of them, isn't it.

Speaker 2 (02:43):
It is a long battle and it's not a quick fix.
You're absolutely right. So, and that they have done their
best to mitigate that. They've leased planes, they've taken other
actions that they can at least put some capacity on
those routes. But those those least planes and those least
engines do come at a cost as well, and that's
probably impacting these short terms. So for them right now,
it probably does feel a bit like a trade off

(03:04):
between results right now in the short term and actually
preserving their strength in the longer term.

Speaker 1 (03:09):
Oliver, while I've got you, do you have any opinion
on the softening of the Climate disclosure rules today?

Speaker 2 (03:14):
Oh? Yes, Look, the issue associated with CRD has really
was set back when it was first implemented, and that
was really where New Zealand took the somewhat unique approach
of applying the regime to listed companies only and excluding
every other unlisted company. And it's a pretty arbitrary and

(03:39):
discriminatory way to base a regime. So essentially that created
the conditions where yep, you had regulary arbitrage where private
companies did not want to list on the exchange in
the context of that cost and boss that was coming up.
And look, but no doubt that were relaxing that threshold
to by a significant degree. Will it will help the

(04:01):
exchange at least to some extent, But it doesn't take
away that fundamental regulatory a charge that exists. And actually
what it does do is it puts at risk New Zealand.
International investor confidence in New Zealand is a credible place
to invest, as well, you know, we're walking backwards from
those commitments. That's differentiating us from the world in terms

(04:21):
of the progress that they're making in terms of their disclosures.
That this is a really nuanced argument, and it does
feel a bit like the government's taken a very blunt
ax to solve what is actually a really nuanced problem.
It's good to talk to you, Oliver.

Speaker 1 (04:36):
Thank you very much appreciated, Oliver Amanda, chief executive of
the Shareholders Association.

Speaker 2 (04:41):
For more from Heather Duplassy Alan Drive, listen live to
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