August 28, 2025 • 7 mins
Air Zealand's boss is predicting another challenging year ahead.
Our national carrier has seen profits plunge.
It's partly due to weak domestic demand and ongoing engine maintenance issues.
Chief Executive Greg Foran told Mike Hosking it's also facing unavoidable price hikes for things like landing charges, wages, and engineering materials.
He says they can't go down to Bunnings or Mitre 10 to buy a replacement toilet seat for a 787, although he wishes they could.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Two in New Zealand, who came to the company results
party yesterday with one hundred and twenty six million net profit,
which is down thirteen point seven percent. There is a
five percent increase in airfare is coming as well, and
a sense the tough times ain't over yet. Greg Furan
is of course the chief executive and is back with us.
Good to see you. So let's start with the good news.
My sister was on the dreamline of the new Dreamliner
yesterday flying to Australia and she's lucky enough to be
(00:21):
up the front of the plane and was speaking very
favorably of the new experience. So there's a win for
you there.
Speaker 2 (00:27):
I'm going to take it. And we've got four of
them done. We're the first in the world to get
Dreamliners retrofitted, actually, of any airline in the world. We've
got fourteen of them. Four are done. We should have
seven done by the end of the year and all
of them completed by the end of the following year,
plus two new Dreamliners coming in March next year.
Speaker 1 (00:46):
Right when you say that, and I assume you sake
with an element of pride, at no point did you
think I should really hang around till they're in place
and get some good headlines and some good news and
some good slaps on the back.
Speaker 2 (00:57):
Not really how I operate. And one of the things
I've land in this business is that just when you
think things are coming right, be ready for the next
side swipe. So I'm not getting out because of side swipes.
I'm getting out because we've got a terrific person to
replace me. I've got some other things that I would
like to explore in my life. So the timing is
about right.
Speaker 1 (01:17):
We'll talk about the new CEO in a moment. Was
the best headline yesterday? I had nothing to do with you, actually,
but it says people love travel more than they hate quantus.
Now you can identify, I'm assuming with that in the
sense that you've got that same reputational thing that people
do hate quantas and some people do hate here in
New Zealand. How do you counter that and deal with them?
Speaker 2 (01:39):
You know, Reputation I think is pretty critical, and I
often ask myself in the airline business, is it as
important in the airline business as it is in other organizations,
for example, like retail where I came from. Clearly, points
programs in airlines are an interesting way of ensuring loyalty.
(02:00):
Though I don't like the airline, but I've got seven
trillion points with them. Am I going to go and
fly on a competitor? And the answer is some do,
but most don't, So it's a pretty sticky business. However,
having said that, I don't think there's any excuse for
not ever treating your customer as well, and so we
focus on that intently. And you know I've spoken before
(02:23):
about our stakeholder model. I worry about customers, staff, suppliers,
communities in which we operate in, and shareholders, and I
try and do the best job I can for all
five of those stakeholders. Having said that, I'd say to
you that the Quantus result was a very good result yesterday.
Slightly different set of circumstances that they operate in. They're
(02:45):
not dealing with some of the engine issues. They're not
dealing with some of the domestic challenges that we're faced.
They'll have some of the inflation issues that we're dealing with, though.
Speaker 1 (02:56):
Let me come to that. So just strip out, because
that's what I want to know. Take out your engines
and take out the economy, which isn't your fault. Neither
of your fault. Are you as a company as fighting
fit as Quantus appears to be.
Speaker 2 (03:11):
I would say, yes we are. We've been prepared to
invest in, for example, aircraft that's still coming for them.
They've got some coming, but their fleet is almost twice
the age of white ours is, so they've got a
pretty heavy CAPEX bill coming their way. We've been spending
on things like a new hangar which actually finished yesterday
(03:33):
out at Auckland Airport. That's one hundred and seventy million
dollars worth of investment. We've plied in about another one
hundred and fifty million dollars worth of investment into an
engine center down in christ Church that we have a
JV with. We've updated most of our digital systems, so
I am happy that as I hand over to Nickel,
(03:54):
actually the foundations of their New Zealand are good. And
as we see an provement and engines which will come,
and as we see the economy start to pick up
in New Zealand is actually very well positioned.
Speaker 1 (04:07):
Okay, The great question around the economy do you see
the pickup? Will it happen?
Speaker 2 (04:12):
It will happen, of course it will, I would say
to you. Just at the moment, it's still pretty hard going,
particularly out of Wellington and Auckland. And as I shared
with some people yesterday, some of the analysts, you know,
government passenger numbers are down ten percent on same time
last year. Corporate numbers are down five percent on same
(04:32):
time last year. We're in a disposable income business. You
don't have to fly or fly as much. But that
will change and i'd hope that by now it would
be picking up, as I'm sure everyone did, but it isn't.
But it isn't just yet.
Speaker 1 (04:47):
And you've written off the rest of the year, haven't
you not completely? But you're not bullies.
Speaker 2 (04:50):
It's going to be tough, going to be tough, certainly
for us through to Christmas.
Speaker 1 (04:54):
Okay, the inflation story, how much of that is just
playing cost plus accounting and is straight up and down unfair.
Speaker 2 (05:01):
A reasonable amount of it. And I'll pick sort of
four areas quickly and go through them. You know, this
is a highly regulated industry. There aren't too many supplies.
If you're a supplier in the airline business at the moment,
you could jump on and have a look at their
share prices. They're going through the roof because they keep
putting the prices up. They can't. We can't go down
(05:22):
to Bunnings or Miter ten and buy a replacement toilet
seat for a seven eighty seven. I wish I could,
but I can't. So inflation in parts is up forty
percent over the last five years and another ten percent
this year, so that's if you like double CPI. Airport
increases were up fifty seven percent for the last five years.
(05:44):
This is all airport up another six percent this year.
That's another twenty four million dollars. CIA and ABSEC have,
in fairness, have actually been static for the previous five years,
but they had a ninety percent increase this year, which
is another forty seven million dollars. You know, their funding
has probably been stripped out, so they're trying to recover cost.
(06:05):
I could go on, but we have to bear that
and unfortunately we can absorb some, we can offset some
with improvements in the business, but ultimately some of it
has to.
Speaker 1 (06:16):
Pass, which is the five percent. But isn't that a
cyclical problem for this country? If they do it, you
do it in round and round we go, and that's
called inflation.
Speaker 2 (06:25):
Yeah, And of course when inflation comes down. Prices don't
come down. No, So that is what's happening.
Speaker 1 (06:31):
Talk to me about Nicol.
Speaker 2 (06:33):
What a fantastic choice. You know, the board went through
a very thorough process. You know, many many candidates were
looked at. They then got down to a short list.
He was our internal candidate. He joined the business five
years ago. I employed him. I felt that he probably
in time, would you be able to rise up and
(06:55):
replace me? And that's exactly what has happened. I'm thrilled
the business internally is and thrilled I get good feedback
from around the community. He's going to be a great CEO.
Speaker 1 (07:06):
So that answers my question that you came from offshore.
Luxon came from offshore, this was internal? Was it internal
because you couldn't find anybody from offshore who was good
enough in other words, reputational issues.
Speaker 2 (07:18):
No, we had a variety of people that the board
looked at and it's really a question for the board.
But Nicholas the standout candidate and you got the job.
Speaker 1 (07:28):
Fantastic. So what are you doing next?
Speaker 2 (07:30):
Haven't decided. So what I do know is my wife
doesn't want me at home. She loves me dearly, but
she prefers me at work. So once I get through
this particular shift, and that'll be at the end of October,
then I'll focus on what's next.
Speaker 1 (07:45):
Good stuff. Might see you before you go. Nice to
see you for now though, Thank you Greg for and
in New Zealand's.
Speaker 2 (07:49):
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.
Two in New Zealand, who came to the company results
party yesterday with one hundred and twenty six million net profit,
which is down thirteen point seven percent. There is a
five percent increase in airfare is coming as well, and
a sense the tough times ain't over yet. Greg Furan
is of course the chief executive and is back with us.
Good to see you. So let's start with the good news.
My sister was on the dreamline of the new Dreamliner
yesterday flying to Australia and she's lucky enough to be
(00:21):
up the front of the plane and was speaking very
favorably of the new experience. So there's a win for
you there.
Speaker 2 (00:27):
I'm going to take it. And we've got four of
them done. We're the first in the world to get
Dreamliners retrofitted, actually, of any airline in the world. We've
got fourteen of them. Four are done. We should have
seven done by the end of the year and all
of them completed by the end of the following year,
plus two new Dreamliners coming in March next year.
Speaker 1 (00:46):
Right when you say that, and I assume you sake
with an element of pride, at no point did you
think I should really hang around till they're in place
and get some good headlines and some good news and
some good slaps on the back.
Speaker 2 (00:57):
Not really how I operate. And one of the things
I've land in this business is that just when you
think things are coming right, be ready for the next
side swipe. So I'm not getting out because of side swipes.
I'm getting out because we've got a terrific person to
replace me. I've got some other things that I would
like to explore in my life. So the timing is
about right.
Speaker 1 (01:17):
We'll talk about the new CEO in a moment. Was
the best headline yesterday? I had nothing to do with you, actually,
but it says people love travel more than they hate quantus.
Now you can identify, I'm assuming with that in the
sense that you've got that same reputational thing that people
do hate quantas and some people do hate here in
New Zealand. How do you counter that and deal with them?
Speaker 2 (01:39):
You know, Reputation I think is pretty critical, and I
often ask myself in the airline business, is it as
important in the airline business as it is in other organizations,
for example, like retail where I came from. Clearly, points
programs in airlines are an interesting way of ensuring loyalty.
(02:00):
Though I don't like the airline, but I've got seven
trillion points with them. Am I going to go and
fly on a competitor? And the answer is some do,
but most don't, So it's a pretty sticky business. However,
having said that, I don't think there's any excuse for
not ever treating your customer as well, and so we
focus on that intently. And you know I've spoken before
(02:23):
about our stakeholder model. I worry about customers, staff, suppliers,
communities in which we operate in, and shareholders, and I
try and do the best job I can for all
five of those stakeholders. Having said that, I'd say to
you that the Quantus result was a very good result yesterday.
Slightly different set of circumstances that they operate in. They're
(02:45):
not dealing with some of the engine issues. They're not
dealing with some of the domestic challenges that we're faced.
They'll have some of the inflation issues that we're dealing with, though.
Speaker 1 (02:56):
Let me come to that. So just strip out, because
that's what I want to know. Take out your engines
and take out the economy, which isn't your fault. Neither
of your fault. Are you as a company as fighting
fit as Quantus appears to be.
Speaker 2 (03:11):
I would say, yes we are. We've been prepared to
invest in, for example, aircraft that's still coming for them.
They've got some coming, but their fleet is almost twice
the age of white ours is, so they've got a
pretty heavy CAPEX bill coming their way. We've been spending
on things like a new hangar which actually finished yesterday
(03:33):
out at Auckland Airport. That's one hundred and seventy million
dollars worth of investment. We've plied in about another one
hundred and fifty million dollars worth of investment into an
engine center down in christ Church that we have a
JV with. We've updated most of our digital systems, so
I am happy that as I hand over to Nickel,
(03:54):
actually the foundations of their New Zealand are good. And
as we see an provement and engines which will come,
and as we see the economy start to pick up
in New Zealand is actually very well positioned.
Speaker 1 (04:07):
Okay, The great question around the economy do you see
the pickup? Will it happen?
Speaker 2 (04:12):
It will happen, of course it will, I would say
to you. Just at the moment, it's still pretty hard going,
particularly out of Wellington and Auckland. And as I shared
with some people yesterday, some of the analysts, you know,
government passenger numbers are down ten percent on same time
last year. Corporate numbers are down five percent on same
(04:32):
time last year. We're in a disposable income business. You
don't have to fly or fly as much. But that
will change and i'd hope that by now it would
be picking up, as I'm sure everyone did, but it isn't.
But it isn't just yet.
Speaker 1 (04:47):
And you've written off the rest of the year, haven't
you not completely? But you're not bullies.
Speaker 2 (04:50):
It's going to be tough, going to be tough, certainly
for us through to Christmas.
Speaker 1 (04:54):
Okay, the inflation story, how much of that is just
playing cost plus accounting and is straight up and down unfair.
Speaker 2 (05:01):
A reasonable amount of it. And I'll pick sort of
four areas quickly and go through them. You know, this
is a highly regulated industry. There aren't too many supplies.
If you're a supplier in the airline business at the moment,
you could jump on and have a look at their
share prices. They're going through the roof because they keep
putting the prices up. They can't. We can't go down
(05:22):
to Bunnings or Miter ten and buy a replacement toilet
seat for a seven eighty seven. I wish I could,
but I can't. So inflation in parts is up forty
percent over the last five years and another ten percent
this year, so that's if you like double CPI. Airport
increases were up fifty seven percent for the last five years.
(05:44):
This is all airport up another six percent this year.
That's another twenty four million dollars. CIA and ABSEC have,
in fairness, have actually been static for the previous five years,
but they had a ninety percent increase this year, which
is another forty seven million dollars. You know, their funding
has probably been stripped out, so they're trying to recover cost.
(06:05):
I could go on, but we have to bear that
and unfortunately we can absorb some, we can offset some
with improvements in the business, but ultimately some of it
has to.
Speaker 1 (06:16):
Pass, which is the five percent. But isn't that a
cyclical problem for this country? If they do it, you
do it in round and round we go, and that's
called inflation.
Speaker 2 (06:25):
Yeah, And of course when inflation comes down. Prices don't
come down. No, So that is what's happening.
Speaker 1 (06:31):
Talk to me about Nicol.
Speaker 2 (06:33):
What a fantastic choice. You know, the board went through
a very thorough process. You know, many many candidates were
looked at. They then got down to a short list.
He was our internal candidate. He joined the business five
years ago. I employed him. I felt that he probably
in time, would you be able to rise up and
(06:55):
replace me? And that's exactly what has happened. I'm thrilled
the business internally is and thrilled I get good feedback
from around the community. He's going to be a great CEO.
Speaker 1 (07:06):
So that answers my question that you came from offshore.
Luxon came from offshore, this was internal? Was it internal
because you couldn't find anybody from offshore who was good
enough in other words, reputational issues.
Speaker 2 (07:18):
No, we had a variety of people that the board
looked at and it's really a question for the board.
But Nicholas the standout candidate and you got the job.
Speaker 1 (07:28):
Fantastic. So what are you doing next?
Speaker 2 (07:30):
Haven't decided. So what I do know is my wife
doesn't want me at home. She loves me dearly, but
she prefers me at work. So once I get through
this particular shift, and that'll be at the end of October,
then I'll focus on what's next.
Speaker 1 (07:45):
Good stuff. Might see you before you go. Nice to
see you for now though, Thank you Greg for and
in New Zealand's.
Speaker 2 (07:49):
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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