1 00:00:00,080 --> 00:00:02,080 Speaker 1: Two in New Zealand, who came to the company results 2 00:00:02,160 --> 00:00:04,400 Speaker 1: party yesterday with one hundred and twenty six million net profit, 3 00:00:04,400 --> 00:00:06,400 Speaker 1: which is down thirteen point seven percent. There is a 4 00:00:06,480 --> 00:00:08,799 Speaker 1: five percent increase in airfare is coming as well, and 5 00:00:08,920 --> 00:00:12,160 Speaker 1: a sense the tough times ain't over yet. Greg Furan 6 00:00:12,240 --> 00:00:14,240 Speaker 1: is of course the chief executive and is back with us. 7 00:00:14,280 --> 00:00:16,680 Speaker 1: Good to see you. So let's start with the good news. 8 00:00:16,720 --> 00:00:18,920 Speaker 1: My sister was on the dreamline of the new Dreamliner 9 00:00:19,000 --> 00:00:21,720 Speaker 1: yesterday flying to Australia and she's lucky enough to be 10 00:00:21,800 --> 00:00:24,279 Speaker 1: up the front of the plane and was speaking very 11 00:00:24,280 --> 00:00:26,840 Speaker 1: favorably of the new experience. So there's a win for 12 00:00:26,880 --> 00:00:27,240 Speaker 1: you there. 13 00:00:27,440 --> 00:00:29,479 Speaker 2: I'm going to take it. And we've got four of 14 00:00:29,480 --> 00:00:31,440 Speaker 2: them done. We're the first in the world to get 15 00:00:31,680 --> 00:00:35,479 Speaker 2: Dreamliners retrofitted, actually, of any airline in the world. We've 16 00:00:35,520 --> 00:00:37,559 Speaker 2: got fourteen of them. Four are done. We should have 17 00:00:37,560 --> 00:00:39,239 Speaker 2: seven done by the end of the year and all 18 00:00:39,240 --> 00:00:42,200 Speaker 2: of them completed by the end of the following year, 19 00:00:42,200 --> 00:00:45,840 Speaker 2: plus two new Dreamliners coming in March next year. 20 00:00:46,040 --> 00:00:48,559 Speaker 1: Right when you say that, and I assume you sake 21 00:00:48,600 --> 00:00:51,000 Speaker 1: with an element of pride, at no point did you 22 00:00:51,040 --> 00:00:53,520 Speaker 1: think I should really hang around till they're in place 23 00:00:53,560 --> 00:00:55,480 Speaker 1: and get some good headlines and some good news and 24 00:00:55,520 --> 00:00:56,640 Speaker 1: some good slaps on the back. 25 00:00:57,840 --> 00:00:59,760 Speaker 2: Not really how I operate. And one of the things 26 00:00:59,760 --> 00:01:03,000 Speaker 2: I've land in this business is that just when you 27 00:01:03,120 --> 00:01:05,360 Speaker 2: think things are coming right, be ready for the next 28 00:01:05,400 --> 00:01:09,200 Speaker 2: side swipe. So I'm not getting out because of side swipes. 29 00:01:09,240 --> 00:01:11,640 Speaker 2: I'm getting out because we've got a terrific person to 30 00:01:11,720 --> 00:01:14,360 Speaker 2: replace me. I've got some other things that I would 31 00:01:14,440 --> 00:01:17,080 Speaker 2: like to explore in my life. So the timing is 32 00:01:17,120 --> 00:01:17,520 Speaker 2: about right. 33 00:01:17,640 --> 00:01:19,560 Speaker 1: We'll talk about the new CEO in a moment. Was 34 00:01:19,720 --> 00:01:22,000 Speaker 1: the best headline yesterday? I had nothing to do with you, actually, 35 00:01:22,040 --> 00:01:25,680 Speaker 1: but it says people love travel more than they hate quantus. 36 00:01:26,680 --> 00:01:29,640 Speaker 1: Now you can identify, I'm assuming with that in the 37 00:01:29,680 --> 00:01:32,520 Speaker 1: sense that you've got that same reputational thing that people 38 00:01:32,560 --> 00:01:34,760 Speaker 1: do hate quantas and some people do hate here in 39 00:01:34,800 --> 00:01:39,480 Speaker 1: New Zealand. How do you counter that and deal with them? 40 00:01:39,800 --> 00:01:43,040 Speaker 2: You know, Reputation I think is pretty critical, and I 41 00:01:43,080 --> 00:01:46,560 Speaker 2: often ask myself in the airline business, is it as 42 00:01:46,600 --> 00:01:51,000 Speaker 2: important in the airline business as it is in other organizations, 43 00:01:51,040 --> 00:01:55,560 Speaker 2: for example, like retail where I came from. Clearly, points 44 00:01:55,600 --> 00:01:59,680 Speaker 2: programs in airlines are an interesting way of ensuring loyalty. 45 00:02:00,080 --> 00:02:02,559 Speaker 2: Though I don't like the airline, but I've got seven 46 00:02:02,640 --> 00:02:05,600 Speaker 2: trillion points with them. Am I going to go and 47 00:02:05,640 --> 00:02:08,639 Speaker 2: fly on a competitor? And the answer is some do, 48 00:02:08,800 --> 00:02:13,560 Speaker 2: but most don't, So it's a pretty sticky business. However, 49 00:02:13,600 --> 00:02:16,679 Speaker 2: having said that, I don't think there's any excuse for 50 00:02:16,760 --> 00:02:19,760 Speaker 2: not ever treating your customer as well, and so we 51 00:02:19,840 --> 00:02:23,360 Speaker 2: focus on that intently. And you know I've spoken before 52 00:02:23,440 --> 00:02:27,600 Speaker 2: about our stakeholder model. I worry about customers, staff, suppliers, 53 00:02:27,680 --> 00:02:31,240 Speaker 2: communities in which we operate in, and shareholders, and I 54 00:02:31,320 --> 00:02:33,560 Speaker 2: try and do the best job I can for all 55 00:02:33,680 --> 00:02:36,840 Speaker 2: five of those stakeholders. Having said that, I'd say to 56 00:02:36,880 --> 00:02:40,320 Speaker 2: you that the Quantus result was a very good result yesterday. 57 00:02:42,080 --> 00:02:45,680 Speaker 2: Slightly different set of circumstances that they operate in. They're 58 00:02:45,680 --> 00:02:47,760 Speaker 2: not dealing with some of the engine issues. They're not 59 00:02:47,840 --> 00:02:52,280 Speaker 2: dealing with some of the domestic challenges that we're faced. 60 00:02:53,280 --> 00:02:55,959 Speaker 2: They'll have some of the inflation issues that we're dealing with, though. 61 00:02:56,120 --> 00:02:58,720 Speaker 1: Let me come to that. So just strip out, because 62 00:02:58,720 --> 00:03:00,960 Speaker 1: that's what I want to know. Take out your engines 63 00:03:01,160 --> 00:03:04,080 Speaker 1: and take out the economy, which isn't your fault. Neither 64 00:03:04,120 --> 00:03:07,639 Speaker 1: of your fault. Are you as a company as fighting 65 00:03:07,720 --> 00:03:09,520 Speaker 1: fit as Quantus appears to be. 66 00:03:11,600 --> 00:03:15,080 Speaker 2: I would say, yes we are. We've been prepared to 67 00:03:15,240 --> 00:03:19,440 Speaker 2: invest in, for example, aircraft that's still coming for them. 68 00:03:19,520 --> 00:03:23,480 Speaker 2: They've got some coming, but their fleet is almost twice 69 00:03:23,520 --> 00:03:25,640 Speaker 2: the age of white ours is, so they've got a 70 00:03:25,760 --> 00:03:30,200 Speaker 2: pretty heavy CAPEX bill coming their way. We've been spending 71 00:03:30,240 --> 00:03:33,600 Speaker 2: on things like a new hangar which actually finished yesterday 72 00:03:33,600 --> 00:03:36,040 Speaker 2: out at Auckland Airport. That's one hundred and seventy million 73 00:03:36,080 --> 00:03:39,920 Speaker 2: dollars worth of investment. We've plied in about another one 74 00:03:40,000 --> 00:03:42,800 Speaker 2: hundred and fifty million dollars worth of investment into an 75 00:03:42,840 --> 00:03:45,080 Speaker 2: engine center down in christ Church that we have a 76 00:03:45,160 --> 00:03:49,160 Speaker 2: JV with. We've updated most of our digital systems, so 77 00:03:49,800 --> 00:03:54,160 Speaker 2: I am happy that as I hand over to Nickel, 78 00:03:54,680 --> 00:03:58,440 Speaker 2: actually the foundations of their New Zealand are good. And 79 00:03:58,520 --> 00:04:01,600 Speaker 2: as we see an provement and engines which will come, 80 00:04:02,080 --> 00:04:04,680 Speaker 2: and as we see the economy start to pick up 81 00:04:05,040 --> 00:04:07,360 Speaker 2: in New Zealand is actually very well positioned. 82 00:04:07,480 --> 00:04:10,160 Speaker 1: Okay, The great question around the economy do you see 83 00:04:10,200 --> 00:04:11,520 Speaker 1: the pickup? Will it happen? 84 00:04:12,560 --> 00:04:15,800 Speaker 2: It will happen, of course it will, I would say 85 00:04:15,800 --> 00:04:18,560 Speaker 2: to you. Just at the moment, it's still pretty hard going, 86 00:04:18,720 --> 00:04:22,000 Speaker 2: particularly out of Wellington and Auckland. And as I shared 87 00:04:22,040 --> 00:04:24,840 Speaker 2: with some people yesterday, some of the analysts, you know, 88 00:04:25,400 --> 00:04:29,360 Speaker 2: government passenger numbers are down ten percent on same time 89 00:04:29,440 --> 00:04:32,840 Speaker 2: last year. Corporate numbers are down five percent on same 90 00:04:32,880 --> 00:04:35,440 Speaker 2: time last year. We're in a disposable income business. You 91 00:04:35,480 --> 00:04:38,560 Speaker 2: don't have to fly or fly as much. But that 92 00:04:38,640 --> 00:04:42,279 Speaker 2: will change and i'd hope that by now it would 93 00:04:42,320 --> 00:04:45,679 Speaker 2: be picking up, as I'm sure everyone did, but it isn't. 94 00:04:45,720 --> 00:04:47,080 Speaker 2: But it isn't just yet. 95 00:04:47,120 --> 00:04:48,640 Speaker 1: And you've written off the rest of the year, haven't 96 00:04:48,680 --> 00:04:50,440 Speaker 1: you not completely? But you're not bullies. 97 00:04:50,440 --> 00:04:52,720 Speaker 2: It's going to be tough, going to be tough, certainly 98 00:04:52,839 --> 00:04:54,080 Speaker 2: for us through to Christmas. 99 00:04:54,160 --> 00:04:57,440 Speaker 1: Okay, the inflation story, how much of that is just 100 00:04:57,480 --> 00:05:00,920 Speaker 1: playing cost plus accounting and is straight up and down unfair. 101 00:05:01,600 --> 00:05:04,800 Speaker 2: A reasonable amount of it. And I'll pick sort of 102 00:05:04,800 --> 00:05:08,360 Speaker 2: four areas quickly and go through them. You know, this 103 00:05:08,440 --> 00:05:11,320 Speaker 2: is a highly regulated industry. There aren't too many supplies. 104 00:05:11,400 --> 00:05:14,240 Speaker 2: If you're a supplier in the airline business at the moment, 105 00:05:14,800 --> 00:05:16,320 Speaker 2: you could jump on and have a look at their 106 00:05:16,360 --> 00:05:19,120 Speaker 2: share prices. They're going through the roof because they keep 107 00:05:19,160 --> 00:05:22,520 Speaker 2: putting the prices up. They can't. We can't go down 108 00:05:22,560 --> 00:05:26,880 Speaker 2: to Bunnings or Miter ten and buy a replacement toilet 109 00:05:26,960 --> 00:05:28,840 Speaker 2: seat for a seven eighty seven. I wish I could, 110 00:05:28,880 --> 00:05:32,000 Speaker 2: but I can't. So inflation in parts is up forty 111 00:05:32,000 --> 00:05:34,799 Speaker 2: percent over the last five years and another ten percent 112 00:05:35,200 --> 00:05:39,680 Speaker 2: this year, so that's if you like double CPI. Airport 113 00:05:39,720 --> 00:05:44,280 Speaker 2: increases were up fifty seven percent for the last five years. 114 00:05:44,279 --> 00:05:47,400 Speaker 2: This is all airport up another six percent this year. 115 00:05:48,279 --> 00:05:52,080 Speaker 2: That's another twenty four million dollars. CIA and ABSEC have, 116 00:05:52,640 --> 00:05:55,840 Speaker 2: in fairness, have actually been static for the previous five years, 117 00:05:56,240 --> 00:05:59,240 Speaker 2: but they had a ninety percent increase this year, which 118 00:05:59,279 --> 00:06:02,160 Speaker 2: is another forty seven million dollars. You know, their funding 119 00:06:02,200 --> 00:06:05,240 Speaker 2: has probably been stripped out, so they're trying to recover cost. 120 00:06:05,839 --> 00:06:09,720 Speaker 2: I could go on, but we have to bear that 121 00:06:10,080 --> 00:06:13,840 Speaker 2: and unfortunately we can absorb some, we can offset some 122 00:06:13,960 --> 00:06:16,359 Speaker 2: with improvements in the business, but ultimately some of it 123 00:06:16,400 --> 00:06:16,680 Speaker 2: has to. 124 00:06:16,720 --> 00:06:19,680 Speaker 1: Pass, which is the five percent. But isn't that a 125 00:06:19,720 --> 00:06:22,320 Speaker 1: cyclical problem for this country? If they do it, you 126 00:06:22,360 --> 00:06:23,960 Speaker 1: do it in round and round we go, and that's 127 00:06:24,000 --> 00:06:24,640 Speaker 1: called inflation. 128 00:06:25,360 --> 00:06:28,240 Speaker 2: Yeah, And of course when inflation comes down. Prices don't 129 00:06:28,240 --> 00:06:31,120 Speaker 2: come down. No, So that is what's happening. 130 00:06:31,480 --> 00:06:32,719 Speaker 1: Talk to me about Nicol. 131 00:06:33,200 --> 00:06:36,720 Speaker 2: What a fantastic choice. You know, the board went through 132 00:06:36,720 --> 00:06:41,160 Speaker 2: a very thorough process. You know, many many candidates were 133 00:06:41,160 --> 00:06:43,599 Speaker 2: looked at. They then got down to a short list. 134 00:06:44,120 --> 00:06:48,320 Speaker 2: He was our internal candidate. He joined the business five 135 00:06:48,400 --> 00:06:52,960 Speaker 2: years ago. I employed him. I felt that he probably 136 00:06:53,000 --> 00:06:55,800 Speaker 2: in time, would you be able to rise up and 137 00:06:55,839 --> 00:06:59,279 Speaker 2: replace me? And that's exactly what has happened. I'm thrilled 138 00:06:59,320 --> 00:07:02,479 Speaker 2: the business internally is and thrilled I get good feedback 139 00:07:02,480 --> 00:07:06,120 Speaker 2: from around the community. He's going to be a great CEO. 140 00:07:06,279 --> 00:07:10,000 Speaker 1: So that answers my question that you came from offshore. 141 00:07:10,480 --> 00:07:14,080 Speaker 1: Luxon came from offshore, this was internal? Was it internal 142 00:07:14,120 --> 00:07:16,480 Speaker 1: because you couldn't find anybody from offshore who was good 143 00:07:16,560 --> 00:07:18,400 Speaker 1: enough in other words, reputational issues. 144 00:07:18,600 --> 00:07:22,720 Speaker 2: No, we had a variety of people that the board 145 00:07:22,760 --> 00:07:25,200 Speaker 2: looked at and it's really a question for the board. 146 00:07:25,240 --> 00:07:28,600 Speaker 2: But Nicholas the standout candidate and you got the job. 147 00:07:28,760 --> 00:07:30,640 Speaker 1: Fantastic. So what are you doing next? 148 00:07:30,960 --> 00:07:34,600 Speaker 2: Haven't decided. So what I do know is my wife 149 00:07:34,640 --> 00:07:36,640 Speaker 2: doesn't want me at home. She loves me dearly, but 150 00:07:36,680 --> 00:07:40,240 Speaker 2: she prefers me at work. So once I get through 151 00:07:40,680 --> 00:07:43,680 Speaker 2: this particular shift, and that'll be at the end of October, 152 00:07:43,680 --> 00:07:45,080 Speaker 2: then I'll focus on what's next. 153 00:07:45,200 --> 00:07:46,920 Speaker 1: Good stuff. Might see you before you go. Nice to 154 00:07:46,920 --> 00:07:48,640 Speaker 1: see you for now though, Thank you Greg for and 155 00:07:48,640 --> 00:07:49,760 Speaker 1: in New Zealand's. 156 00:07:49,760 --> 00:07:52,640 Speaker 2: For more from the mic Asking Breakfast, listen live to 157 00:07:52,760 --> 00:07:55,840 Speaker 2: news talks. It'd be from six am weekdays, or follow 158 00:07:55,880 --> 00:07:57,800 Speaker 2: the podcast on iHeartRadio.