Air NZ: Revenue drops by $5bn+, up to 3500 jobs to go

31st March 2020 By Staff Reporter | news@tourismticker.com | @tourismticker

Air New Zealand’s annual revenue has dropped by more than $5bn and the airline is expected to shed up to 3500 jobs over the following year.

In an update to customers yesterday, the carrier said it had cut capacity by 95% and was now earning less than $500m annually, down from around $5.8bn in FY19.

Greg Foran

However, the company had $1bn in cash reserves and had secured a $900m loan facility from the Government to cope with the impact of the Covid-19 pandemic.

“While we are expecting at least domestic bookings to increase again once the [Covid-19] level 4 alert has been lifted, the harsh reality is that most countries, including New Zealand, will rightly take a cautious approach to opening their borders again,” said Air New Zealand’s chief executive, Greg Foran.

“International tourism flows make up around two-thirds of Air New Zealand’s revenue, which means the lack of incoming tourists also has a flow-on effect on our domestic network.

“In that light, it is clear that the Air New Zealand which emerges from Covid-19 will be a much smaller and largely domestic airline with limited international services to keep supply lines open for the foreseeable future.”

Foran said the company had “begun the process of consulting about large-scale workforce reductions in our international regions” with New Zealand to follow.

The airline would reduce its staff of 12,500 by almost 30% or up to 3,500 jobs.

“We have been collaborating with our unions and our Air New Zealanders to explore how we can together reduce the costs of running our airline,” said Foran.

“Many Air New Zealanders have offered to take leave without pay, reduce their hours or explore voluntary exits. We have also made savings from voluntary pay cuts by the board of directors, myself as chief executive officer and my executive team, and cancelling all incentive payments for staff on individual employment agreements.”

Foran said these were “painful but necessary measures” to ensure the airline’s survival.

“We are committed to supporting affected Air New Zealanders as they transition out of the business. We are exploring redeployment opportunities and have in place a range of free independent services, such as budgeting, mental health counselling support and career advice.”

These were “unprecedented and challenging days,” said Foran.

“However, I am confident that by taking the necessary measures now, Air New Zealand will get through this difficult situation and one day return to serve all our destinations at home and many more around the world.”

The E tu organiser Savage said it was not yet time to discuss redundancies when people can’t meet directly, and the company should use the next few weeks to work through the issues.