February 20, 2025 • 9 mins
Air New Zealand expects to be short of planes for at least another two or three years.
Our national carrier's recording an 18% drop in half-year profit.
That follows a 65% in full-year profit last year.
Chief Executive Greg Foran told Mike Hosking they're going into a period when up to 11 aircrafts will be out of action.
He says it's a bit like playing a rugby match without the front row.
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Episode Transcript
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Speaker 1 (00:00):
The troubles that in New Zealand have been having played
out in number for yesterday as a half year result,
got release profits down eighteen percent to one hundred and
six million. Are they found out that basically if your
engines don't work, the planes have trouble getting off the ground.
Air New Zealand's Tube executive Greg four And is back
with us. Very good morning to you, Good morning, glass
half full. It could have been worse? Is that fair?
Speaker 2 (00:22):
No? I would actually say Mike that I'm pretty proud
of the result that Air New Zealand's has delivered for
the half you know, when you consider the amount of
aircraft we hadn't been able to get, it's a bit
like playing a rugby match without your front row. And
I'm really proud of the way that our team have
stepped up. I think they've done a terrific job.
Speaker 1 (00:41):
When does the trouble end.
Speaker 2 (00:44):
Probably two to three years. Unfortunately, there's a pretty long
lead time. There's probably about two thousand aircraft that have
got to get built between Boeing and air Bus, and
on top of that we've got Rolls Royce with a
few challenges, Pratt and Whitney with challenges and you know,
once again I say, you've got to work through it.
(01:05):
It's not going to get fixed quickly. But I think
the team is doing a very good job actually managing
and what are pretty challenging circumstances.
Speaker 1 (01:13):
What's your biggest problem the engines or the new planes
you aren't getting?
Speaker 2 (01:18):
Primarily, I would say the engines first up. We're heading
into a period mic where we're going to have eleven
of our aircraft unavailable. That's going to be about seven
thousand seats a day. We have to cover that by
bringing in least aircraft. We're actually as recently as yesterday
scrambling around to try and get another what we call
(01:40):
wet leaf aircraft. So that's where you know, a set
of crew, including the pilots, actually come in and fly
because we just cannot get enough engines out of rolls
Royce and Pratt and Whitneys.
Speaker 1 (01:54):
I have tremendous Are you being paid by them by
way of compensation? I read a number. It was, but
it didn't make up for the loss your your suffering,
does it?
Speaker 2 (02:03):
That's correct? So they did. They paid us just over
ninety million dollars for the first half, and you're right.
It doesn't make up for what we're missing. There would
be over another forty million that we have that we
have to incur. But you know that doesn't include what
it does to your reputation, and that's what worries me
so most. You know, because people get on a plane,
(02:25):
it may not be any New Zealand plane or it's
an older plane, and we're having to scramble harder and
you know, and what that means is that the operation
doesn't run as well. You know, the Swiss watch that
I often talk about internally is not quite as accurate
as we want it to be. But I can tell
you we are striving to do this and we're not
(02:46):
sitting on our hands, not for one day.
Speaker 1 (02:47):
There are a couple of I mean, you can do it,
slice it up different ways. The domestic reputation seems to
be really troubled. Is your domestic network affected by engines.
Speaker 2 (02:58):
Indirectly? It is because in order to cover the fact
that we are six of our ear bars a three
twenty ones down our best aircraft, we're asking the regional
turbo props to fly harder. And you know by that,
I mean having to do sectors that you wouldn't ask
them to do so that puts a bit of pressure
(03:20):
on parts and maintenance and people. The good news is
we track this every single day and I can tell
you I get as frustrated as anyone I see every
single cancelation that comes through in this business. The good
news is we're making some real headway and actually since
the beginning of the year there had not been too
(03:41):
many cancelations. In fact, cancelations for year to date are running.
It just to tad over one percent into three averages two.
We went through a period just before Christmas.
Speaker 1 (03:54):
I'm looking at the seventy two seventy four percent on
time takeoff landing. That was your problem because that fell
off from November, didn't.
Speaker 2 (04:02):
It's November wasn't great. And you know those stats are public.
We share them with the mot and you know, look,
they may be better than some others, but that's not
the benchmark that we set an Near New Zealand. We
want that number actually to be about eighty three percent.
The good news is since January, that's what we've been delivering.
Speaker 1 (04:24):
The I know this is rough, but for the purposes
of this interview, I look at Singapore, Emirates, Quantus, United, Katar,
career in terms of revenue and their profit. They're doing
many times more profit off revenue than you are. Why.
Speaker 2 (04:41):
Two things, They're not dealing with the same economic situation
that we are. You know, our government spend on the
domestic airline is significant, a significant portion. That is down
twenty five percent. Corporate spend is a significant portion of
domestic that's down ten. Second thing, they're not dealing with
(05:04):
the same engine issues. See, it all depends what model
engine you have on your plane. We unfortunately had the
two that is most troubled at the moment.
Speaker 1 (05:16):
So that will part dumb luck.
Speaker 2 (05:18):
It will pass, Yeah.
Speaker 1 (05:19):
Of course it will. But that's just because that was
my next question. None of these people seem to have
the problems you do. Is that just sheer dumb luck?
We bought the wrong planes.
Speaker 2 (05:28):
Well, it's easy in hindsight to say, you know, maybe
we shouldn't have bought the Trent one thousand and we
should have bought, you know, the gen X engine, which
is a general electric engine. We made that decision back
in two thousand and four. We put it on a
plane in twenty and fourteen. We had troubles with it.
In twenty and seventeen, and that trouble continues they have
(05:50):
to solve. I can't go back that far in two
thousand and four, but it is what it is.
Speaker 1 (05:57):
Well, I get that, so you got to do it.
But it's an amazing thing that we appear to be
the only airline in the world that made it that poorly,
doesn't it? I mean somebody else who had the same problems,
But you can't. So somebody somewhere made a massive cockup.
Speaker 2 (06:14):
I can. I can give you the names of those
so I can tell you that Whizair in Europe is
comparing all they've.
Speaker 1 (06:20):
Got, Greg, we can't compare ourselves to wizir. Is that
what this has come down to. I've given you. I'm
giving you the airlines are flying to the country, Singapore, Emirates, Quantas,
Qatar United. These are our competitors. Whizzya doesn't fly here.
Speaker 2 (06:33):
Well, you know what I will say is that some
of that is also scale mic. You know, when you
run a smaller airline relatively, which is what we do,
you can't afford to go and spread yourself with having
like four different engines on a fleet. You've got all
that extra tooling and all the other things. Because our
white bodied fleet is circa just over twenty. If you're
(06:56):
running a business like United and you've got six hundred
wide bodies, then you spread your bets. We generally have
to take one or two bets. So we have Boeing
on the wide body, Airbus on the narrowbody. That's appropriate.
We run a Trent on the wide bodied and we
run Pratt and Whitney on the narrowbody. That's the right
(07:20):
sort of decision making for an airline of our size,
but it leaves you a bit vulnerable if things start
to get tough.
Speaker 1 (07:26):
Okay, I understand that. Look I have simply with your situation.
It's just that you can imagine the text I get
on a regular basis about any New Zealand's verious service.
Two quick questions. London is it back and when?
Speaker 2 (07:39):
Probably two and a half years, dependent on delivery from Boeing.
We expect to get first new planes about the middle
of next year. We want to boost up our services
to New York and London is on the list. We
do have the ability to go there. We do have
slots that are available right.
Speaker 1 (08:00):
Second question was I read an article in the Sydney
Morning Herald and this is just one of many. At
the moment, they are piling first class seats back into
planes as fast as they possibly can. Internationally, people are
prepared to pay seemingly any amount of money to fly
in luxury. Is what you're doing with the referb of
the airline going to miss the market buy some margin?
Speaker 2 (08:21):
Absolutely not great question. Good news is you know in
about four weeks time, maybe you and I'll have a
chat because by then the first of our retrofits comes
back in. Well, it's been hard work getting that done.
We're right on the cusp of getting the first one
that does have all the new product in it included,
and that is what we call an ELITK front row.
(08:44):
When our customers get on there, you're going to see
about a thirty percent increase in premium. But having said that,
the whole plane has been retrofitted in the latest and greatest.
We'll also have a new uniforms on it. It's going
to be great and we haven't missed the mark at all.
I think we're well timed for it and the business
(09:05):
is in a great position.
Speaker 1 (09:06):
All right, good to talk to you. Appreciate it very much.
Greg Boran, who is the New Zealand chief executive.
Speaker 2 (09:11):
For more from the mic Asking Breakfast, listen live to
news talks it'd be from six am weekdays, or follow
the podcast on iHeartRadio
The troubles that in New Zealand have been having played
out in number for yesterday as a half year result,
got release profits down eighteen percent to one hundred and
six million. Are they found out that basically if your
engines don't work, the planes have trouble getting off the ground.
Air New Zealand's Tube executive Greg four And is back
with us. Very good morning to you, Good morning, glass
half full. It could have been worse? Is that fair?
Speaker 2 (00:22):
No? I would actually say Mike that I'm pretty proud
of the result that Air New Zealand's has delivered for
the half you know, when you consider the amount of
aircraft we hadn't been able to get, it's a bit
like playing a rugby match without your front row. And
I'm really proud of the way that our team have
stepped up. I think they've done a terrific job.
Speaker 1 (00:41):
When does the trouble end.
Speaker 2 (00:44):
Probably two to three years. Unfortunately, there's a pretty long
lead time. There's probably about two thousand aircraft that have
got to get built between Boeing and air Bus, and
on top of that we've got Rolls Royce with a
few challenges, Pratt and Whitney with challenges and you know,
once again I say, you've got to work through it.
(01:05):
It's not going to get fixed quickly. But I think
the team is doing a very good job actually managing
and what are pretty challenging circumstances.
Speaker 1 (01:13):
What's your biggest problem the engines or the new planes
you aren't getting?
Speaker 2 (01:18):
Primarily, I would say the engines first up. We're heading
into a period mic where we're going to have eleven
of our aircraft unavailable. That's going to be about seven
thousand seats a day. We have to cover that by
bringing in least aircraft. We're actually as recently as yesterday
scrambling around to try and get another what we call
(01:40):
wet leaf aircraft. So that's where you know, a set
of crew, including the pilots, actually come in and fly
because we just cannot get enough engines out of rolls
Royce and Pratt and Whitneys.
Speaker 1 (01:54):
I have tremendous Are you being paid by them by
way of compensation? I read a number. It was, but
it didn't make up for the loss your your suffering,
does it?
Speaker 2 (02:03):
That's correct? So they did. They paid us just over
ninety million dollars for the first half, and you're right.
It doesn't make up for what we're missing. There would
be over another forty million that we have that we
have to incur. But you know that doesn't include what
it does to your reputation, and that's what worries me
so most. You know, because people get on a plane,
(02:25):
it may not be any New Zealand plane or it's
an older plane, and we're having to scramble harder and
you know, and what that means is that the operation
doesn't run as well. You know, the Swiss watch that
I often talk about internally is not quite as accurate
as we want it to be. But I can tell
you we are striving to do this and we're not
(02:46):
sitting on our hands, not for one day.
Speaker 1 (02:47):
There are a couple of I mean, you can do it,
slice it up different ways. The domestic reputation seems to
be really troubled. Is your domestic network affected by engines.
Speaker 2 (02:58):
Indirectly? It is because in order to cover the fact
that we are six of our ear bars a three
twenty ones down our best aircraft, we're asking the regional
turbo props to fly harder. And you know by that,
I mean having to do sectors that you wouldn't ask
them to do so that puts a bit of pressure
(03:20):
on parts and maintenance and people. The good news is
we track this every single day and I can tell
you I get as frustrated as anyone I see every
single cancelation that comes through in this business. The good
news is we're making some real headway and actually since
the beginning of the year there had not been too
(03:41):
many cancelations. In fact, cancelations for year to date are running.
It just to tad over one percent into three averages two.
We went through a period just before Christmas.
Speaker 1 (03:54):
I'm looking at the seventy two seventy four percent on
time takeoff landing. That was your problem because that fell
off from November, didn't.
Speaker 2 (04:02):
It's November wasn't great. And you know those stats are public.
We share them with the mot and you know, look,
they may be better than some others, but that's not
the benchmark that we set an Near New Zealand. We
want that number actually to be about eighty three percent.
The good news is since January, that's what we've been delivering.
Speaker 1 (04:24):
The I know this is rough, but for the purposes
of this interview, I look at Singapore, Emirates, Quantus, United, Katar,
career in terms of revenue and their profit. They're doing
many times more profit off revenue than you are. Why.
Speaker 2 (04:41):
Two things, They're not dealing with the same economic situation
that we are. You know, our government spend on the
domestic airline is significant, a significant portion. That is down
twenty five percent. Corporate spend is a significant portion of
domestic that's down ten. Second thing, they're not dealing with
(05:04):
the same engine issues. See, it all depends what model
engine you have on your plane. We unfortunately had the
two that is most troubled at the moment.
Speaker 1 (05:16):
So that will part dumb luck.
Speaker 2 (05:18):
It will pass, Yeah.
Speaker 1 (05:19):
Of course it will. But that's just because that was
my next question. None of these people seem to have
the problems you do. Is that just sheer dumb luck?
We bought the wrong planes.
Speaker 2 (05:28):
Well, it's easy in hindsight to say, you know, maybe
we shouldn't have bought the Trent one thousand and we
should have bought, you know, the gen X engine, which
is a general electric engine. We made that decision back
in two thousand and four. We put it on a
plane in twenty and fourteen. We had troubles with it.
In twenty and seventeen, and that trouble continues they have
(05:50):
to solve. I can't go back that far in two
thousand and four, but it is what it is.
Speaker 1 (05:57):
Well, I get that, so you got to do it.
But it's an amazing thing that we appear to be
the only airline in the world that made it that poorly,
doesn't it? I mean somebody else who had the same problems,
But you can't. So somebody somewhere made a massive cockup.
Speaker 2 (06:14):
I can. I can give you the names of those
so I can tell you that Whizair in Europe is
comparing all they've.
Speaker 1 (06:20):
Got, Greg, we can't compare ourselves to wizir. Is that
what this has come down to. I've given you. I'm
giving you the airlines are flying to the country, Singapore, Emirates, Quantas,
Qatar United. These are our competitors. Whizzya doesn't fly here.
Speaker 2 (06:33):
Well, you know what I will say is that some
of that is also scale mic. You know, when you
run a smaller airline relatively, which is what we do,
you can't afford to go and spread yourself with having
like four different engines on a fleet. You've got all
that extra tooling and all the other things. Because our
white bodied fleet is circa just over twenty. If you're
(06:56):
running a business like United and you've got six hundred
wide bodies, then you spread your bets. We generally have
to take one or two bets. So we have Boeing
on the wide body, Airbus on the narrowbody. That's appropriate.
We run a Trent on the wide bodied and we
run Pratt and Whitney on the narrowbody. That's the right
(07:20):
sort of decision making for an airline of our size,
but it leaves you a bit vulnerable if things start
to get tough.
Speaker 1 (07:26):
Okay, I understand that. Look I have simply with your situation.
It's just that you can imagine the text I get
on a regular basis about any New Zealand's verious service.
Two quick questions. London is it back and when?
Speaker 2 (07:39):
Probably two and a half years, dependent on delivery from Boeing.
We expect to get first new planes about the middle
of next year. We want to boost up our services
to New York and London is on the list. We
do have the ability to go there. We do have
slots that are available right.
Speaker 1 (08:00):
Second question was I read an article in the Sydney
Morning Herald and this is just one of many. At
the moment, they are piling first class seats back into
planes as fast as they possibly can. Internationally, people are
prepared to pay seemingly any amount of money to fly
in luxury. Is what you're doing with the referb of
the airline going to miss the market buy some margin?
Speaker 2 (08:21):
Absolutely not great question. Good news is you know in
about four weeks time, maybe you and I'll have a
chat because by then the first of our retrofits comes
back in. Well, it's been hard work getting that done.
We're right on the cusp of getting the first one
that does have all the new product in it included,
and that is what we call an ELITK front row.
(08:44):
When our customers get on there, you're going to see
about a thirty percent increase in premium. But having said that,
the whole plane has been retrofitted in the latest and greatest.
We'll also have a new uniforms on it. It's going
to be great and we haven't missed the mark at all.
I think we're well timed for it and the business
(09:05):
is in a great position.
Speaker 1 (09:06):
All right, good to talk to you. Appreciate it very much.
Greg Boran, who is the New Zealand chief executive.
Speaker 2 (09:11):
For more from the mic Asking Breakfast, listen live to
news talks it'd be from six am weekdays, or follow
the podcast on iHeartRadio
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