In the North Island, Red Wind Warnings are in place for Wellington and southern Wairarapa.
There are extensive public transport and flight cancellations.
Air New Zealand says it's already cancelled almost 100 flights today.
CEO Nikhil Ravishankar says told Mike Hosking that it will only operate flights if it's safe to do so.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Our national airline has a new CEO. Nicol rabis Shanka
was the New Zealand Chief Digital Officer. Refaces difficult days
a company short on planes and engines, of course, in
a reputation at times from an unforgiving public. This I
understand it is his first interview as CEO, so he's
with the s warmest congratulations on the job. Do you
or did you join the company five years ago with
a view to running it or it's happenstance?
Speaker 2 (00:22):
Do you mind if I use your platform very quickly
to mention one.
Speaker 1 (00:25):
Thing, Oh, here we go, we've got to sale on here.
Speaker 2 (00:29):
No, a lot of our staff listened to your show,
and the last couple of days we've been dealing with
some terrible weather and today is probably the worst of it.
So just wanted to give them a shout out and
to our customers. We'll do everything to keep you guys
safe in these conditions. It's a tough business. And just
to go back to your question, No, I didn't join
(00:50):
too with aspirations to necessarily be CEO of film completely honestly.
Speaker 1 (00:55):
What did you join by way of a company five
years ago? And what is that company look like now
that you're running it five years on.
Speaker 2 (01:03):
Yeah, the call I got was to was to sort
of join the company to be part of the rebuilt program,
rebuilding the airline back out of COVID. I joined during
the second lockdown, And you know, I often describe this
to people and say, airlines were never designed with a
with an off switch. They're sort of perpetual motion machines.
(01:24):
You've got to keep them going all the time. And
so when we turned the airline off, basically, by and large,
turning it back on has been the most complex thing
I've done in my career. But it's also been the
most rewarding. And each time we went about the rebuild
process and where and had to deal with another crisis,
(01:45):
one crisis after another. You know what's been most rewarding
is our focus has been to never waste that crisis.
So we've been busy investing in the long term health
of the business, in physical infrastructure, a lot of digital work,
and in our people.
Speaker 1 (02:03):
I don't even know that I want to go here,
but you talk about closing the air line down, not
everybody during COVID did close the air line down globally.
Of course, I wonder if us closing as a country,
our rear line down was a mistake.
Speaker 2 (02:16):
We have taken a lot of lessons actually out of COVID,
and some of that you're seeing in our current financial performance.
In hindsight, one of the things we would have done
differently is some of these more critical, very specialized roles,
we would have held on to them for much longer.
You know, it takes six years to retrain an aircraft engineer,
for example. Once you let go of a lot of
(02:38):
that capacity, building it back up takes an inodinate amount
of time. That's why this time around, even though demand's
been low, we're holding much more capacity in some of
those very critical capabilities, and I think that's the right
thing to be doing.
Speaker 1 (02:55):
Also, I don't know whether it was part of your
job in any way, shape or form, but the airline
went to the government of the day and got what
I seem to think was one of the worst deals
in the history of financial deals ever. And there's a
market out there for good money for aviation companies who
wanted to borrow. You guys went and borrowed from the
government and paid a price for that. Do you regret that.
Speaker 2 (03:15):
It's before my time? Makee to be honest with you,
and I haven't you know, I've heard that narrative, but
there were some incredibly intelligent, capable people working this problem.
And you know, I think that narrative may be overly simplistic.
Speaker 1 (03:32):
The perfect storm scenario. So you bought a series of
planes from a company that couldn't deliver your engines went wrong.
It's still an issue long term. You've got ongoing scraps
with them and you and your head COVID. I mean,
you couldn't have orchestrated a bigger calamity if you set
out to orchestraate one.
Speaker 2 (03:50):
Could you tough circumstances? Yeah, you're right, But you know,
New Zealand relies on aviation quite a bit more than
most countries around the world. About fourteen to sixteen percent
of our GDP relies on it. I mean, if you
contrast that with the United States, which is a you know,
a very mature and a significant aviation market, about four
(04:14):
percent of their national GDP relies on it. And that's
for obvious reasons. Right, We're a fairly large, sparsely populated
country in the middle of nowhere, far away from everywhere else,
and we need the airline. So This is tough circumstances
for Air New Zealand, but it's not lost on us
that that creates a lot of strain on New Zealand,
(04:35):
and so we have to work damn hard to resolve
them rather than feel sorry for ourselves.
Speaker 1 (04:41):
Given you are now in charge, and given what you
told the market yesterday, what state is the company? And
right now.
Speaker 2 (04:50):
The company is in a fantastic state. You know. The
fundamentals of the business are in real good shape. We've
been doing a lot of work around investing in core infrastructure,
as I've mentioned to you, and it's a complex business,
like all of us. We bet on the fact that
we had bottomed out from a sort of economic standpoint
(05:12):
and things were coming right, and that's taken longer than
we would like. We also bet on the fact that
taking the word of our key suppliers that we have
our engines back and those both of those things are
taking a bit longer. Now. What I'm not saying, Mike,
is that we don't have work to do. You know,
there is always work to do to improve your business,
and we've got extensive plans to do that. But the
(05:34):
fundamentals of the business are very strong, have.
Speaker 1 (05:36):
You been lit down by aeroplane supplies and engine supplies.
I mean, you know, fundamentally lit down.
Speaker 2 (05:42):
They've struggled with the same things that we've had to
struggle with. Restarting the aviation system has been more complicated.
You know, your titanium suppliers are in regions where there's war,
for example. You know, you've lost your engineers because we'd
built this highly globalized network of labor and parts, and
(06:02):
those things are, as we all know, a bit wobbly
at the moment. So I'm not sure I want to
necessarily throw them under the bus. But you know, it's
been a while since we've come out of COVID. We
all need to sort of get on with it. And
they are. Last week actually I was with our board
with the CEO of Boeing Group and the CEO of
(06:24):
the global Boeing Global Aviation Business, and they gave us
most of their day. And we're a small airline, a
very small customer. We have great relationships with them and
they are coming right. They're starting to build more seven
eight sevens in their factory in Charleston.
Speaker 1 (06:39):
Good all right, News talks will be sixteen past night.
Nicol Robershanker is the New Air New Zealand CEO. One
of the most contentious things you'll deal with, and you'll
be well aware of it given you're not new to
the company. Is this business of regional New Zealand and
you rip people off and it's nine million dollars to
fly to Tamuru and it's unfair. How do you addrisk them?
Speaker 2 (07:02):
I get that flying is very expensive. It's as expensive
as it's ever been. One of the reasons for that
is the cost of running an airline has gone up significantly.
Just to give you one stat we spend about four
million dollars a day on fuel. A day on fuel
(07:23):
costs have gone up about forty five percent. One of
those costs is our own internal labor and that's gone
up about twenty six percent since twenty nineteen, so at
or just below inflation. But spare parts are more expensive,
aircraft more expensive, and you know, the more sinister issue,
(07:44):
as you know, and it's it's been Greg's passion project
and it will continue to be mine, is the aviation
system costs that have gone up significantly, including our landing charges.
So what we're trying to do is not pass all
of it to the consumer, because we get that air
travel is expensive and our recent market guidance is proof
(08:06):
of that. But we'll continue to try and optimize costs
and we'll continue to fight for long term interests of
the consumer. But in certain situations, Mike, there is probably
a need for us to look at sort of situational
subsidies for some of these routes. I've spent a bit
(08:26):
of time studying what happens in Norway, for example. You know,
there are communities that rely on air travel quite significantly.
They are very, very sub subeconomic. You know, our competitors
have no interest in going anywhere near those places. We
do because we don't have a transactional relationship with New Zealand.
But we need to make sure that we continue to
(08:47):
keep those communities connected.
Speaker 1 (08:49):
So the subsidy comes from with the government or you well.
Speaker 2 (08:52):
At the moment there is none and so we're you know,
the shareholder is but you know, it ends up subsidizing
I suppose, but it needs to be more of a
systematic conversation about what does air travel mean to the
local GDP of the regions and how do we continue
to support that.
Speaker 1 (09:12):
That's encouraging if I take you what you would and
what you said to the market yesterday. You are losing money.
You expect to lose money. So if you got all
your planes, and you got all your engines, and you
got what you said before about the company's structurally being
in a sound place, one would you be making money?
And two how much.
Speaker 2 (09:32):
National flag carriers, particularly New Zealand, so in New Zealand,
so air New Zealand.
Speaker 1 (09:38):
Because we are.
Speaker 2 (09:38):
A small market, our success is inextricably linked with New
Zealand's success. So the other variable I'd throw in there
is the New Zealand economy. If all of those conditions
are true, of course we would be making money and
a sustainable airline, and New Zealand needs sustainable airline more
(10:01):
than most countries for the reasons I pointed out earlier,
should be making reasonably somewhere between eight to ten percent
EBIT margin and about fourteen percent return on invested capital.
That would be at a sort of six billion dollars
of revenue, about four hundred and eighty million to six
hundred million dollars, So.
Speaker 1 (10:21):
Let's peak to the good or though it's pre COVID,
that was the number roughly right, roughly, Yeah, it was.
Speaker 2 (10:26):
It was sort of the number. And to put that
in context, you know, last year's profit one hundred and
thirty million dollars or just under wouldn't buy you half
a seven eight seven, could you be?
Speaker 1 (10:38):
I mean, I know you won't want to answer this,
but does having a government with the stake they've got,
is that good for business or not? Or should you
be sold?
Speaker 2 (10:47):
Like that's a question for the shareholder and the board.
But if you want my opinion, because I've got one,
I love this country and given what's happening to geopolitically
and so on, I think an airline is critically important.
Speaker 1 (11:02):
For New Zealand to be owned by New Zealanders.
Speaker 2 (11:05):
Well, for New Zealanders have to have some agency in that.
Speaker 1 (11:08):
So either fly either floated or owned directly by the government,
whatever way you want it. Well, the only thing I'd
argue with is because we're running out of time. The
only thing I'd argue with when you talk about the
New Zealand economy. You're right, but to the extent that
that we've seen it all over the world. People travel
and we we travel. Yes, you're you don't seem to
be benefiting from that. The way other airlines are. Some
(11:30):
some airlines globally are fantastically profitable because we've all gone
nuts post COVID.
Speaker 2 (11:36):
We have gone nuts. You know, we as New Zealanders
aren't traveling to the United States as much, for example,
because they're dollars a week and politics may or may
not have a role in it, but you know, we
need to we need to acknowledge that. And just to
be clear, I think companies like a New Zealand can't
be victims of the you know, economy. We have a
(11:57):
massive role to play to influence the outcome. And way
we're influencing the outcome is going to places like Asia,
going to places like the United States and trying to
convince the recession proof rich citizens of those places to
get here and spend their money, not once, but make
New Zealand a repeat, you know, destination for their holidays.
Speaker 1 (12:16):
How long are you here for?
Speaker 2 (12:20):
I think, you know, one of the things Greg's done
is really created room for growth and having a good
succession plan in place. Working for Air New Zealand is
honestly truly one of the great honors and privileges of
my life. But I have a huge responsibility to then
(12:40):
make sure someone else is ready to take that over.
So as soon as a good succession plan is in
place and we've sort of navigated through the next chapter,
I'll get out of the way and give the next
person a go.
Speaker 1 (12:53):
We will talk to you again, hopefully soon. Appreciate it
very much. Nichol Rebishenk, the new CEO of The New
zealand more from the Mic Asking Breakfast. Listen live to
News Talk Set B from six am weekdays, or follow
the podcast on iHeartRadio.
Our national airline has a new CEO. Nicol rabis Shanka
was the New Zealand Chief Digital Officer. Refaces difficult days
a company short on planes and engines, of course, in
a reputation at times from an unforgiving public. This I
understand it is his first interview as CEO, so he's
with the s warmest congratulations on the job. Do you
or did you join the company five years ago with
a view to running it or it's happenstance?
Speaker 2 (00:22):
Do you mind if I use your platform very quickly
to mention one.
Speaker 1 (00:25):
Thing, Oh, here we go, we've got to sale on here.
Speaker 2 (00:29):
No, a lot of our staff listened to your show,
and the last couple of days we've been dealing with
some terrible weather and today is probably the worst of it.
So just wanted to give them a shout out and
to our customers. We'll do everything to keep you guys
safe in these conditions. It's a tough business. And just
to go back to your question, No, I didn't join
(00:50):
too with aspirations to necessarily be CEO of film completely honestly.
Speaker 1 (00:55):
What did you join by way of a company five
years ago? And what is that company look like now
that you're running it five years on.
Speaker 2 (01:03):
Yeah, the call I got was to was to sort
of join the company to be part of the rebuilt program,
rebuilding the airline back out of COVID. I joined during
the second lockdown, And you know, I often describe this
to people and say, airlines were never designed with a
with an off switch. They're sort of perpetual motion machines.
(01:24):
You've got to keep them going all the time. And
so when we turned the airline off, basically, by and large,
turning it back on has been the most complex thing
I've done in my career. But it's also been the
most rewarding. And each time we went about the rebuild
process and where and had to deal with another crisis,
(01:45):
one crisis after another. You know what's been most rewarding
is our focus has been to never waste that crisis.
So we've been busy investing in the long term health
of the business, in physical infrastructure, a lot of digital work,
and in our people.
Speaker 1 (02:03):
I don't even know that I want to go here,
but you talk about closing the air line down, not
everybody during COVID did close the air line down globally.
Of course, I wonder if us closing as a country,
our rear line down was a mistake.
Speaker 2 (02:16):
We have taken a lot of lessons actually out of COVID,
and some of that you're seeing in our current financial performance.
In hindsight, one of the things we would have done
differently is some of these more critical, very specialized roles,
we would have held on to them for much longer.
You know, it takes six years to retrain an aircraft engineer,
for example. Once you let go of a lot of
(02:38):
that capacity, building it back up takes an inodinate amount
of time. That's why this time around, even though demand's
been low, we're holding much more capacity in some of
those very critical capabilities, and I think that's the right
thing to be doing.
Speaker 1 (02:55):
Also, I don't know whether it was part of your
job in any way, shape or form, but the airline
went to the government of the day and got what
I seem to think was one of the worst deals
in the history of financial deals ever. And there's a
market out there for good money for aviation companies who
wanted to borrow. You guys went and borrowed from the
government and paid a price for that. Do you regret that.
Speaker 2 (03:15):
It's before my time? Makee to be honest with you,
and I haven't you know, I've heard that narrative, but
there were some incredibly intelligent, capable people working this problem.
And you know, I think that narrative may be overly simplistic.
Speaker 1 (03:32):
The perfect storm scenario. So you bought a series of
planes from a company that couldn't deliver your engines went wrong.
It's still an issue long term. You've got ongoing scraps
with them and you and your head COVID. I mean,
you couldn't have orchestrated a bigger calamity if you set
out to orchestraate one.
Speaker 2 (03:50):
Could you tough circumstances? Yeah, you're right, But you know,
New Zealand relies on aviation quite a bit more than
most countries around the world. About fourteen to sixteen percent
of our GDP relies on it. I mean, if you
contrast that with the United States, which is a you know,
a very mature and a significant aviation market, about four
(04:14):
percent of their national GDP relies on it. And that's
for obvious reasons. Right, We're a fairly large, sparsely populated
country in the middle of nowhere, far away from everywhere else,
and we need the airline. So This is tough circumstances
for Air New Zealand, but it's not lost on us
that that creates a lot of strain on New Zealand,
(04:35):
and so we have to work damn hard to resolve
them rather than feel sorry for ourselves.
Speaker 1 (04:41):
Given you are now in charge, and given what you
told the market yesterday, what state is the company? And
right now.
Speaker 2 (04:50):
The company is in a fantastic state. You know. The
fundamentals of the business are in real good shape. We've
been doing a lot of work around investing in core infrastructure,
as I've mentioned to you, and it's a complex business,
like all of us. We bet on the fact that
we had bottomed out from a sort of economic standpoint
(05:12):
and things were coming right, and that's taken longer than
we would like. We also bet on the fact that
taking the word of our key suppliers that we have
our engines back and those both of those things are
taking a bit longer. Now. What I'm not saying, Mike,
is that we don't have work to do. You know,
there is always work to do to improve your business,
and we've got extensive plans to do that. But the
(05:34):
fundamentals of the business are very strong, have.
Speaker 1 (05:36):
You been lit down by aeroplane supplies and engine supplies.
I mean, you know, fundamentally lit down.
Speaker 2 (05:42):
They've struggled with the same things that we've had to
struggle with. Restarting the aviation system has been more complicated.
You know, your titanium suppliers are in regions where there's war,
for example. You know, you've lost your engineers because we'd
built this highly globalized network of labor and parts, and
(06:02):
those things are, as we all know, a bit wobbly
at the moment. So I'm not sure I want to
necessarily throw them under the bus. But you know, it's
been a while since we've come out of COVID. We
all need to sort of get on with it. And
they are. Last week actually I was with our board
with the CEO of Boeing Group and the CEO of
(06:24):
the global Boeing Global Aviation Business, and they gave us
most of their day. And we're a small airline, a
very small customer. We have great relationships with them and
they are coming right. They're starting to build more seven
eight sevens in their factory in Charleston.
Speaker 1 (06:39):
Good all right, News talks will be sixteen past night.
Nicol Robershanker is the New Air New Zealand CEO. One
of the most contentious things you'll deal with, and you'll
be well aware of it given you're not new to
the company. Is this business of regional New Zealand and
you rip people off and it's nine million dollars to
fly to Tamuru and it's unfair. How do you addrisk them?
Speaker 2 (07:02):
I get that flying is very expensive. It's as expensive
as it's ever been. One of the reasons for that
is the cost of running an airline has gone up significantly.
Just to give you one stat we spend about four
million dollars a day on fuel. A day on fuel
(07:23):
costs have gone up about forty five percent. One of
those costs is our own internal labor and that's gone
up about twenty six percent since twenty nineteen, so at
or just below inflation. But spare parts are more expensive,
aircraft more expensive, and you know, the more sinister issue,
(07:44):
as you know, and it's it's been Greg's passion project
and it will continue to be mine, is the aviation
system costs that have gone up significantly, including our landing charges.
So what we're trying to do is not pass all
of it to the consumer, because we get that air
travel is expensive and our recent market guidance is proof
(08:06):
of that. But we'll continue to try and optimize costs
and we'll continue to fight for long term interests of
the consumer. But in certain situations, Mike, there is probably
a need for us to look at sort of situational
subsidies for some of these routes. I've spent a bit
(08:26):
of time studying what happens in Norway, for example. You know,
there are communities that rely on air travel quite significantly.
They are very, very sub subeconomic. You know, our competitors
have no interest in going anywhere near those places. We
do because we don't have a transactional relationship with New Zealand.
But we need to make sure that we continue to
(08:47):
keep those communities connected.
Speaker 1 (08:49):
So the subsidy comes from with the government or you well.
Speaker 2 (08:52):
At the moment there is none and so we're you know,
the shareholder is but you know, it ends up subsidizing
I suppose, but it needs to be more of a
systematic conversation about what does air travel mean to the
local GDP of the regions and how do we continue
to support that.
Speaker 1 (09:12):
That's encouraging if I take you what you would and
what you said to the market yesterday. You are losing money.
You expect to lose money. So if you got all
your planes, and you got all your engines, and you
got what you said before about the company's structurally being
in a sound place, one would you be making money?
And two how much.
Speaker 2 (09:32):
National flag carriers, particularly New Zealand, so in New Zealand,
so air New Zealand.
Speaker 1 (09:38):
Because we are.
Speaker 2 (09:38):
A small market, our success is inextricably linked with New
Zealand's success. So the other variable I'd throw in there
is the New Zealand economy. If all of those conditions
are true, of course we would be making money and
a sustainable airline, and New Zealand needs sustainable airline more
(10:01):
than most countries for the reasons I pointed out earlier,
should be making reasonably somewhere between eight to ten percent
EBIT margin and about fourteen percent return on invested capital.
That would be at a sort of six billion dollars
of revenue, about four hundred and eighty million to six
hundred million dollars, So.
Speaker 1 (10:21):
Let's peak to the good or though it's pre COVID,
that was the number roughly right, roughly, Yeah, it was.
Speaker 2 (10:26):
It was sort of the number. And to put that
in context, you know, last year's profit one hundred and
thirty million dollars or just under wouldn't buy you half
a seven eight seven, could you be?
Speaker 1 (10:38):
I mean, I know you won't want to answer this,
but does having a government with the stake they've got,
is that good for business or not? Or should you
be sold?
Speaker 2 (10:47):
Like that's a question for the shareholder and the board.
But if you want my opinion, because I've got one,
I love this country and given what's happening to geopolitically
and so on, I think an airline is critically important.
Speaker 1 (11:02):
For New Zealand to be owned by New Zealanders.
Speaker 2 (11:05):
Well, for New Zealanders have to have some agency in that.
Speaker 1 (11:08):
So either fly either floated or owned directly by the government,
whatever way you want it. Well, the only thing I'd
argue with is because we're running out of time. The
only thing I'd argue with when you talk about the
New Zealand economy. You're right, but to the extent that
that we've seen it all over the world. People travel
and we we travel. Yes, you're you don't seem to
be benefiting from that. The way other airlines are. Some
(11:30):
some airlines globally are fantastically profitable because we've all gone
nuts post COVID.
Speaker 2 (11:36):
We have gone nuts. You know, we as New Zealanders
aren't traveling to the United States as much, for example,
because they're dollars a week and politics may or may
not have a role in it, but you know, we
need to we need to acknowledge that. And just to
be clear, I think companies like a New Zealand can't
be victims of the you know, economy. We have a
(11:57):
massive role to play to influence the outcome. And way
we're influencing the outcome is going to places like Asia,
going to places like the United States and trying to
convince the recession proof rich citizens of those places to
get here and spend their money, not once, but make
New Zealand a repeat, you know, destination for their holidays.
Speaker 1 (12:16):
How long are you here for?
Speaker 2 (12:20):
I think, you know, one of the things Greg's done
is really created room for growth and having a good
succession plan in place. Working for Air New Zealand is
honestly truly one of the great honors and privileges of
my life. But I have a huge responsibility to then
(12:40):
make sure someone else is ready to take that over.
So as soon as a good succession plan is in
place and we've sort of navigated through the next chapter,
I'll get out of the way and give the next
person a go.
Speaker 1 (12:53):
We will talk to you again, hopefully soon. Appreciate it
very much. Nichol Rebishenk, the new CEO of The New
zealand more from the Mic Asking Breakfast. Listen live to
News Talk Set B from six am weekdays, or follow
the podcast on iHeartRadio.
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