Speaker 1: Kirakoto. Welcome to Shared Lunch. I'm Garth Bray. I hate
Speaker 1: to be Captain obvious, but if you are an airline
Speaker 1: and you're not flying, you can't make money. And sadly
Speaker 1: that's been the picture for part of Air New Zealand's fleet.
Speaker 1: Up to a fifth of its planes grounded at any
Speaker 1: one time thanks to engine trouble. That's also dragged down
Speaker 1: its results. You add into that higher non fuel costs
Speaker 1: and a weak economy where fewer people are flying domestically,
Speaker 1: how on earth are they going to chart a profitable future? Well,
Speaker 1: funny you should ask Richard Thompson, the CFO might have
Speaker 1: something to say about that. Before we hear from him.
Speaker 1: It some important information you should always consider before investing.
Speaker 2: Investing involves the risk you might lose the money you
Speaker 2: start with. We recommend talking to a licensed financial advisor.
Speaker 2: We also recommend breading product disclosure documents before deciding to invest.
Speaker 2: Everything you're about to see and here is current at
Speaker 2: the time of recording.
Speaker 1: So, Richard Thompson, I want to start actually with your
Speaker 1: own personal approach to aviation. Welcome to Sharesy Shared Lunch.
Speaker 3: Thanks Gar good to see you.
Speaker 1: Yeah, thank you you are a pilot in your own.
Speaker 3: Right, Ah, yes, amateur.
Speaker 4: So I've got a private pilot's license which is current,
Speaker 4: which I did thirty five years ago. I fly a
Speaker 4: little bit around sort of the country down in Central Uta.
Speaker 4: I go up here sort of once or twice a month.
Speaker 4: Not enough love it, but yeah, it's not quite the
Speaker 4: same as flying a jumbo, but it's my little outlet.
Speaker 1: So being someone that's always been interested in aviation, it
Speaker 1: must be a bit of a dream to be working here.
Speaker 4: It's a lot of fun. I've first joined here in
Speaker 4: two thousand and four and have had an association in
Speaker 4: a professional capacity with the airline since two thousand and
Speaker 4: one or two.
Speaker 3: I think it was. It's an interesting industry to be.
Speaker 4: Part of and a fabulous team to be part of,
Speaker 4: and we're very proud of them. No matter what sort
Speaker 4: of setbacks we're dealing with at any point in time,
Speaker 4: the team has remarkable resilience and just get out every
Speaker 4: day with a smile on their face and get the
Speaker 4: job done.
Speaker 1: I guess the idea is that if you're a pilot,
Speaker 1: you have to I think someone said to me once,
Speaker 1: panic slowly.
Speaker 4: Yes, So I think Greek said there, and I think, well,
Speaker 4: I think panic calmly, calmly. Yeah, sometimes you can't be
Speaker 4: too slow about it, but certainly you just want to
Speaker 4: sort of take stock of the situation, don't rush to conclusions,
Speaker 4: and just sort of calmly work your way through the
Speaker 4: sort of the curveballs that we get dealt from time
Speaker 4: to time.
Speaker 1: So let's maybe just refresh people on the top line
Speaker 1: results that you had out of the last result there.
Speaker 1: How are things looking at the moment.
Speaker 3: Yeah, it's a reasonably tough environment we're in at the moment. Garth.
Speaker 4: As evidenced by the last two years results, we made
Speaker 4: it one hundred and eighty nine million before tax in
Speaker 4: the year just finished thirty June, one hundred and twenty
Speaker 4: six after tax, and there are two or three things
Speaker 4: going on that are influencing it results. Sounds like a
Speaker 4: lot of money in the absolute terms. I guess it
Speaker 4: is a lot of money, but we've got four or
Speaker 4: five billion dollars of aircraft in associated infrastructure, so as
Speaker 4: a return on total assets, a return on investment, it's
Speaker 4: not where we want it to be. Three or four
Speaker 4: things going on there relatively at the stage week Domestic
Speaker 4: economy where optimistic that sort of improvements on the horizon
Speaker 4: is monetary policy ease these as dairies going well, that
Speaker 4: will filter through into the economy. Tourism is coming back
Speaker 4: by bit, which is good to see, but relatively weak
Speaker 4: economy just at the moment. And then in combination with
Speaker 4: that we've got the much publicized engine challenges. So one
Speaker 4: of the great virtues of the New Zealand has always
Speaker 4: been we've continued to invest in new aircraft and equipment,
Speaker 4: which has kept the experience very fresh. In the economics
Speaker 4: of new aircraft are pretty good. We've just been a
Speaker 4: bit unfortunate in the most recent environment to have an
Speaker 4: exposure to what's called the Trent thousand engine which we
Speaker 4: operate on the seven eight seven, and the geared turbofan
Speaker 4: Prats engine it's called the eleven hundred on the narrow
Speaker 4: body jet, and they are relatively new pieces of technology.
Speaker 4: They are safe, they are very economic. The issue that
Speaker 4: we've got is that the maintenance cycle on these engines
Speaker 4: is about a quarter of what it would normally be,
Speaker 4: So most of these wide body Euro engines on the
Speaker 4: seven eight seven would normally fly for three three and
Speaker 4: a half thousand what we call cycles. It's starting engine
Speaker 4: turning it off effectively a flight. They are lasting at
Speaker 4: the moment about anywhere between seven hundred and nine hundred cycles,
Speaker 4: so quite a bit less. And the problem that it
Speaker 4: causes is we have to take the engine off the
Speaker 4: aeroplane that has to go into an overhaul facility. Because
Speaker 4: neither ourselves nor Rolls Royce the engine manufacturer, expecting any
Speaker 4: of this to happen. They don't have a big enough
Speaker 4: global network of facilities to cope with the volume of
Speaker 4: these early engine removals.
Speaker 1: And so not just from any Zealand just.
Speaker 4: From the New Zealand, it's a global issue. We're probably
Speaker 4: unique in this part of the world in the Southern
Speaker 4: Hemisphere having that engine, but there's a lot of Northern
Speaker 4: Hemisphere carriers that have got it. So the engine ends
Speaker 4: up in a queue to get fixed, and that queue
Speaker 4: at times has been over a year long. So it's
Speaker 4: meant that we've had at times or right now, four
Speaker 4: or five of our fourteen to seven eight sevens on
Speaker 4: the ground and four or five of our brand new
Speaker 4: A three twenty one's on the ground, and a business
Speaker 4: that makes margins as fine as our own relatively thin margins.
Speaker 4: Having twenty percenty of your domestic jet fleet sitting on
Speaker 4: the ground, costing you money but not earning an income,
Speaker 4: has a negative effect on financial performance.
Speaker 1: Obviously, does an aircraft make any money at all when
Speaker 1: it's sitting on the ground.
Speaker 3: None. No, it spends money.
Speaker 4: And that's one of the other factors in all of
Speaker 4: this is to actually keep the aircraft on ground we
Speaker 4: call it AOG. To keep that position at twenty percent
Speaker 4: of the fleet has required us to spend a whole
Speaker 4: lot of money in the background to maintain it there.
Speaker 4: If we're not least triple seven aeroplanes or we've leased
Speaker 4: in twenty plus spare engines for the narrow body jet fleet,
Speaker 4: actually the ground at fleet would be much bigger than
Speaker 4: it is. But that's a huge impost on the business.
Speaker 4: We're getting some compensation for it, but in the round
Speaker 4: we're getting roughly thirty cents in every dollar it's costing us.
Speaker 4: So that's it's been a big drag on the business.
Speaker 1: I want to talk about that because presumably if it's
Speaker 1: a manufacturer of fault, it's not performing. I mean, obviously
Speaker 1: there's nothing like the Consumer Guarantees Act that's working here,
Speaker 1: there'll be some pretty serious litigation going on. Is this
Speaker 1: a negotiated settlement effectively between you and the manufacturers to
Speaker 1: achieve that or is it an advance on what might
Speaker 1: come later.
Speaker 4: No, it's a negotiated, ongoing settlement, so it's not full
Speaker 4: and final. As long as the problem persists, we hope
Speaker 4: to be able to negotiate more compensation, but it's not
Speaker 4: a given. And one of the reasons why it's more
Speaker 4: challenging than you think it might be is in New
Speaker 4: Zealand signed the contract on the Rolls Royce engines back
Speaker 4: in two thousand and four, so that contract was signed
Speaker 4: twenty one years ago, so we're out of any sort
Speaker 4: of traditional engine warranty period. Obviously, there are commitments in
Speaker 4: the contract keep us in a spares position, but really
Speaker 4: the terms of those arrangements didn't contemplate the environment that
Speaker 4: US and all these other airlines with the same engine
Speaker 4: type are grappling with. So the negotiated settlements we're doing
Speaker 4: the best we can, but it's not as straightforward. Does
Speaker 4: it probably should be, or or might look to a layperson.
Speaker 1: Does that change at all the kind of approach you
Speaker 1: have to how you'll handle engine fleet purchases these kinds
Speaker 1: of things in the future. Are you're going to mix
Speaker 1: things up a bit, Are you going to put better
Speaker 1: agreements in place? How does it change? It's a great question, Garth.
Speaker 1: I'm not sure you can put better agreements in place.
Speaker 1: If the engine manufacturers had to make good to the
Speaker 1: last dollar, all the losses incurred by these airlines around
Speaker 1: the world would probably go bankrupt themselves.
Speaker 4: So there's sort of a limit to how much they
Speaker 4: can cover. But I think if there's a lesson in
Speaker 4: all of this.
Speaker 3: There is. We were a very early move on the
Speaker 3: seven eight seven.
Speaker 4: We were actually the launch customer for that aeroplane end
Speaker 4: engine with A and A at that point the engine
Speaker 4: hadn't been built. And on the GTF the Pratz engine.
Speaker 4: It's a great engine, but we're a relatively early mover.
Speaker 4: If there was one thing you'd put sort of the
Speaker 4: internet in the institutional archive is maybe god a little
Speaker 4: bit later, wait until these things have got five or
Speaker 4: six years on wing and then pile into it. I
Speaker 4: think it's the lesson there in terms of sort of
Speaker 4: going back to the engine itself that we've got. They
Speaker 4: are good engines and When they're performing, they perform really well.
Speaker 4: We've got a bit of diversity going forward on the
Speaker 4: seven eight seven. We have both the roles and the
Speaker 4: gen X gen X on the new airplanes that are
Speaker 4: delivering starting to deliver from early next year. And we've
Speaker 4: got a mixture of the old V twenty five hundred
Speaker 4: and the GTF on the airbus fleet, so we do
Speaker 4: have a bit of diversification of technology across the airline.
Speaker 1: But so, how did you reach the view that you
Speaker 1: would have achieved substantially higher revenue without this problem. I
Speaker 1: think it was like one hundred and sixty five million
Speaker 1: was the figure that.
Speaker 3: It's meat of compensation.
Speaker 1: Wow.
Speaker 4: Yeah, So the actually the cost to us is in
Speaker 4: gross terms two hundred and fifty three hundred million, and
Speaker 4: that's a combination of a number of factors. One, we
Speaker 4: are flying at the moment the wrong aircraft types to
Speaker 4: the wrong markets. So we've got great big Triple sevens
Speaker 4: with huge premium cabins flying up to Japan, for instance,
Speaker 4: which is the wrong size aeroplane and the wrong cabin
Speaker 4: mix for that market. We've got higher variable operating costs,
Speaker 4: so that's expensive. We've got the cost of leasing extra
Speaker 4: aircraft in to keep the network intact to the extent
Speaker 4: we can. So we've got as I said, three triple
Speaker 4: seven three hundreds that we've rented in short term. By
Speaker 4: that I mean anywhere between three and six years, and
Speaker 4: so that's an expense. All of those aeroplanes are in
Speaker 4: a different configuration to our own, so we carry an
Speaker 4: entire bespoke parts pool for the aeroplane, different catering carts,
Speaker 4: the seats themselves have got different componentry on them, so
Speaker 4: we have to carry huge inventories of different components.
Speaker 1: So you've had to buy a whole bunch of spears.
Speaker 3: We have to do the millions of dollars of all that.
Speaker 4: And then on the narrow body jet type or jet
Speaker 4: fleet I alluded to before, we've had to keep the
Speaker 4: fleet flying. What we've got flying, we've had to leasen
Speaker 4: a huge number of spare engines. Normally we would have
Speaker 4: four spares in normal times. We are carrying twenty soon
Speaker 4: to go to twenty one, and these at enormous cost. So,
Speaker 4: without giving too many secrets away, the cost of renting
Speaker 4: these engines runs to up to a couple of one
Speaker 4: hundred thousand US dollars a month per engine, and that's
Speaker 4: before you start burning any time off the engine because
Speaker 4: there are life limited parts on it. So the total
Speaker 4: cost of that's enormous. So that's the second big issue.
Speaker 4: The third issue is because we don't know when this
Speaker 4: problems exactly when it's going to cure itself, and we
Speaker 4: want to be ready to fly the full network when
Speaker 4: the engine issue recovers. We're carrying most of the staff
Speaker 4: that we were carrying pre COVID in different parts of
Speaker 4: the business pilots, airports, engineering and maintenance.
Speaker 1: That has to be a lesson from COVID, surely, because
Speaker 1: I think as a company you lost a huge number
Speaker 1: of staff four right, so.
Speaker 4: You also we've got all the staff for that very reason.
Speaker 4: We've learned through the COVID that it's really hard, particularly
Speaker 4: in a country as small as this, with a highly
Speaker 4: specialized workforce. You can't just magic them up. So we've
Speaker 4: got everybody on deck, but we are flying twelve percent
Speaker 4: less capacity than we were in twenty nineteen. So there's
Speaker 4: a big scale this economy occurring there in the short term,
Speaker 4: but we are playing a long term game, so we're
Speaker 4: not chasing it down.
Speaker 1: We're prepared for the upswing. Lolocky, you've got a bit
Speaker 1: of a bank balance. They're a cushion the falls.
Speaker 3: It is helpful.
Speaker 4: We don't take it for granted though, and we certainly
Speaker 4: don't want to waste it.
Speaker 1: That's I mean, that's on top of a high cost environment,
Speaker 1: as I understand, where you're paying a lot more. What
Speaker 1: sort of extra costs are you carrying that everybody is
Speaker 1: facing if they're in the airline.
Speaker 4: Yeah, I think so everybody in the airline business is
Speaker 4: facing higher labor costs, although that that is starting to moderate,
Speaker 4: has moderated over the last year or two. Engineering parts
Speaker 4: and components are still incredibly expensive. Through COVID, the global
Speaker 4: aeronautical supply chain was interrupted badly. You've got you always
Speaker 4: think about Boeing, Eearbus, General Electric roles, but actually each
Speaker 4: of those big manufacturers have got huge supply chains of
Speaker 4: much smaller or organizations, a lot of whom or not
Speaker 4: a lot of whom, but a number of whom went
Speaker 4: bankrupt and COVID. You have got one customer might be Boeing.
Speaker 4: Boeing is not buying anything off you.
Speaker 3: You're on life support.
Speaker 4: So a lot of them disappeared from the landscape during COVID,
Speaker 4: and some of them haven't come back, and the ones
Speaker 4: that are back are inundated with demand can't keep up
Speaker 4: with it. So classic economics, supply demand even't got much supply,
Speaker 4: plenty of demand. Guess what that does to prices. So
Speaker 4: we're still seeing that increase materially, and we buy a
Speaker 4: lot of those parts and materials in US dollars, So
Speaker 4: the current exchange rate isn't helpful on that front either.
Speaker 1: But I think, gosh, why are you still shut up
Speaker 1: shop and go home kind of thing?
Speaker 3: Oh no, we love it.
Speaker 4: We're New Zealand's largest deer carrier. You know, we obviously
Speaker 4: the biggest oper domestically. We've got a big network domestically,
Speaker 4: we sort of cover just about everything.
Speaker 3: We've got some.
Speaker 4: Really good regional operators here Chats sounds a great barrier.
Speaker 1: More deals with them, you think coming out in.
Speaker 4: Origin they do some great jobs, sort of in some
Speaker 4: of the smaller ports, really good job. They're facing similar
Speaker 4: precures to us, and we're increasingly working with them where
Speaker 4: we can to just sort of help each other out.
Speaker 1: That govern announcement around I think it was like a
Speaker 1: thirty million dollar facility to try and help that in
Speaker 1: lining sort of enabling them to take it straight through
Speaker 1: to your service or whatever. Does that actually is that
Speaker 1: going to help it all?
Speaker 4: I think it will help. We shouldn't overstate the benefits
Speaker 4: of that, but it is beneficial.
Speaker 1: And does that make those smaller regional flights potentially more
Speaker 1: viable though smaller, it should help, yes, during christ down
Speaker 1: with it.
Speaker 4: It won't bring the costs down, but it might help
Speaker 4: with the revenue and loads.
Speaker 1: I mean, all this kind of comes back to what
Speaker 1: does it cost to fly around? I think I heard
Speaker 1: Greg saying, like anything under two hundred bucks, you're not
Speaker 1: really making any money.
Speaker 4: I think that's probably right. Little know in fact, but
Speaker 4: fun fact is the smaller the aeroplane in, the shorter
Speaker 4: the sect you're flying, the higher the seat cost. So
Speaker 4: we often get sort of asked questions why it costs
Speaker 4: as much to fly from Timaru to Gisbon as it
Speaker 4: costs to fly from sort of Auckland to Brisbane, for instance,
Speaker 4: or even further afield, And it's just scale economies. It's
Speaker 4: the same reason why it costs you a fortune to
Speaker 4: go on a scenic flight around Mount Koch and a
Speaker 4: six seater versus you know, flying in New Zealand from
Speaker 4: Dunedin to Auckland, you're.
Speaker 1: Just spreading the costs over over a much bigger base,
Speaker 1: the bigger the aeroplane gets. Because it's an era of
Speaker 1: pretty stiff competition. I mean, obviously there's renewed competition in
Speaker 1: the domestic marketplace as well. That must make things quite challenging.
Speaker 3: Yet again, yes it is.
Speaker 4: We've always had competition on domestic main trunk and that
Speaker 4: competition is as intense as it's ever been. We've got
Speaker 4: a great network, a great product. We're very proud of
Speaker 4: the service we deliver. We're motivated to that as affordably
Speaker 4: as we possibly can, working hard to ensure that we
Speaker 4: are price competitive. But we've got a very big, ubiquitous
Speaker 4: network in New Zealand and we're the only ones actually
Speaker 4: in the country that fly to virtually all of these places.
Speaker 4: The tough thing was some of the competition is the
Speaker 4: competition gets to pick and choose the ones that they
Speaker 4: want to go after us on and so therefore tend
Speaker 4: to restrict the flying to the biggest, most lucrative sort
Speaker 4: of markets in the country.
Speaker 1: Behind all of that are some very patient shareholders. And
Speaker 1: I'm not even talking about the Crown at this point.
Speaker 1: I mean, I think I'm not wrong in saying that
Speaker 1: the Any Zealand is probably the most held stock or
Speaker 1: one of the most held stocks on the shareses platform.
Speaker 1: It does seem to have quite a wide base. What's
Speaker 1: going on there because the results are, as you say, challenging.
Speaker 3: Is it right?
Speaker 1: Why people hanging on to it?
Speaker 3: Well, I don't know.
Speaker 4: We don't know whether people are hanging on to it
Speaker 4: or not. That we people buying and selling shares all
Speaker 4: the time.
Speaker 1: Well, you're selling home buying a few. At the moment.
Speaker 1: The buyback that's been going on, what are we about
Speaker 1: forty million dollars through.
Speaker 4: It's it's one hundred million dollar buy back, which we're
Speaker 4: sort of planning what we need to have to sort
Speaker 4: of finish by the end of the calendar year, and
Speaker 4: we're a bit over halfway through that.
Speaker 1: And reasonable prices. He would have to say at the moment, yes,
Speaker 1: that's right, Yeah, and that's obviously we wouldn't be buying
Speaker 1: shares back if we didn't think if we were confident
Speaker 1: in the in the long term, medium long term value
Speaker 1: of the company.
Speaker 4: There's no point in us buying shares back for more
Speaker 4: than we think they're worth. But we're in the middle
Speaker 4: of that process at the moment. We've got a capital
Speaker 4: management framework that we're working tightly within, and we just
Speaker 4: had some flexibility within that to give offer an opportunity
Speaker 4: for shareholders.
Speaker 3: That might want to sell in the buyback. The ability
Speaker 3: to do that.
Speaker 1: That comes at a cost. I mean, that's potentially funds
Speaker 1: that you could arguably use for to support a dividend policy.
Speaker 1: That's a lot that's more generous than what it is
Speaker 1: at the moment.
Speaker 4: So we've got a different way of dealing with the dividend.
Speaker 4: So the dividend policy we published a couple of years
Speaker 4: ago links it to earnings, which we think is appropriate.
Speaker 4: So it's anywhere between forty and seventy percent of rolling
Speaker 4: net profit after tax. So as earnings come under pressure,
Speaker 4: the dividend comes down. As earnings improve, the dividend goes up.
Speaker 4: But we treat decisions around buybacks entirely independently of earnings
Speaker 4: in the dividend policy, so the buyback is more a
Speaker 4: function of the strength of the balance sheet, our liquidity position,
Speaker 4: our capex profile, our gearing ratio, how much debt we've
Speaker 4: got in the business, and whether we've got the ability
Speaker 4: to thunder buy back while maintaining all our capital management metrics.
Speaker 4: So we the scope for the buyback program we're running today.
Speaker 4: But I think back to your thing around earnings and
Speaker 4: shareholders patients, which I think you know it's an important
Speaker 4: it's a very important question. We're obviously confident in the
Speaker 4: future of the organization, but short term earnings are under
Speaker 4: pressure and through sort of three reasons I've given some
Speaker 4: of them, but three things that make a successful airline
Speaker 4: generally you need some scale so the business. It always helps,
Speaker 4: particularly in a high inflation environment. It helps if the
Speaker 4: business is growing and we have plans to grow. We've
Speaker 4: got a great fleet plan we're getting We've just taken
Speaker 4: delivery of two new A three twenty one narrowbody jets
Speaker 4: and we're getting some seven eight sevens early next year.
Speaker 4: Five years late, mind, but they are arriving.
Speaker 3: But it's important to have growth.
Speaker 4: With twenty percent of the jet fleet on the ground
Speaker 4: at the moment, we haven't been able to pursue the
Speaker 4: growth agenda we would have liked, but that is coming.
Speaker 4: The second element of it is new technology. New aircraft
Speaker 4: technology generally or almost exclusively lowers the cost seek cost
Speaker 4: of traveling, and we can use that to either make
Speaker 4: fears more competitive and grow the top line end or
Speaker 4: bankerter's margin, usually some combination of the two. But with
Speaker 4: our very best aircraft ten or eleven of them grounded
Speaker 4: at the moment, we are not getting the fleet economics
Speaker 4: that we would have expected.
Speaker 3: We're paying for it.
Speaker 4: So we've got half a billion dollars worth of brand
Speaker 4: new A three twenty one sitting around at the moment,
Speaker 4: burning a literal and figurative hole in the ground.
Speaker 1: But we're in the ballot.
Speaker 4: We're not getting the balance, so we reliant at the
Speaker 4: moment on just good cost control, and that is hard
Speaker 4: and high inflationary environment, but we're making good progress on there.
Speaker 4: So we've got one of the three levers sort of
Speaker 4: going for us at the moment. But that and that
Speaker 4: will be that will persist over twenty twenty six. But
Speaker 4: our expectation now we're getting to the closer to the
Speaker 4: end of these engine problems than the beginning. None of
Speaker 4: us thought it would take this long, but over the
Speaker 4: course of financial year twenty seven and twenty eight, we
Speaker 4: would expect those issues to start resolving themselves and we'll
Speaker 4: get onto a normal footing and start to have those
Speaker 4: three levers working in our favor.
Speaker 1: A couple of years back, I think when you had
Speaker 1: the capital rays that sort of set yourselves up for
Speaker 1: all this twenty twenty two, and you were talking about
Speaker 1: being app at about ninety percent of COVID levels. By now, yes,
Speaker 1: it's right nowhere, nowhere near it.
Speaker 3: I think we're at.
Speaker 4: About eighty eight of pre COVID levels eighty seven, but
Speaker 4: at huge cost. All these rented triple sevens, all these
Speaker 4: rented engines, a whole bunch of new aircraft that we're
Speaker 4: paying for in terms of depreciation and invested capital that
Speaker 4: aren't doing anything. And so while we're close to that
Speaker 4: level of flying, it's coming at a significant cost burden
Speaker 4: that what we didn't anticipate nearly four years ago, Garth
Speaker 4: was the capital rais'd.
Speaker 1: Be nice to get some tourists too, It would something
Speaker 1: like what I think I read fifty or fifty five
Speaker 1: percent levels coming out of China compared with pre COVID levels.
Speaker 1: Obviously that's an industry wide problem, but it's it's it's
Speaker 1: another one of those levers that anyw Zealand's already always
Speaker 1: been quite keen to sign, pull and support what's what's
Speaker 1: going on there.
Speaker 4: At a total country level, I think we're at eighty
Speaker 4: seven eighty eight percent of where we were visitor arrivals
Speaker 4: pre COVID, but within that number, averages are deceiving. So
Speaker 4: within that number, actually the US is ahead of where
Speaker 4: it was pre COVID. So the exchange rate of US
Speaker 4: tourists coming to New Zealand now actually the exchange rates
Speaker 4: amazing for all the reasons why it's tough for a
Speaker 4: key to travel to US the US at the moment,
Speaker 4: so US is sitting actually well above where we were
Speaker 4: pretty COVID.
Speaker 3: Australia just behind.
Speaker 1: I think they might be ninety two to ninety three
Speaker 1: percent of where they were, but they're strong to demand
Speaker 1: out of Australia. So it's one of our best performing markets,
Speaker 1: as you say or allude to the big gap at
Speaker 1: the moments out of China market. So we are I
Speaker 1: think half or very close to half of where we
Speaker 1: were before. I think I've read somewhere it's like over
Speaker 1: five hundred dollars for someone to come here before they've
Speaker 1: even bought the ticket, right, there's a huge visa cost,
Speaker 1: and then you've got that extra visa levy that's been
Speaker 1: put on for tourism and conservation purposes and instead of
Speaker 1: pricing ourselves out of the.
Speaker 4: I don't think it helps. So I'm not for sure
Speaker 4: it's five hundred dollars. It's four forty one, I think for.
Speaker 1: The visa and then the hondy on top and then
Speaker 1: on top.
Speaker 4: So is expensive us in our Singapore offic a couple
Speaker 4: of weeks ago talking to the team up there, and
Speaker 4: there's no doubt it's a friction point compared to other
Speaker 4: countries who have got much lower sort of costs of entry.
Speaker 4: And I think one of the tough things with the
Speaker 4: visa is that it's a levy that's imposed at the
Speaker 4: time people are making decisions about where they're traveling. It's
Speaker 4: not like they've arrived in country committed, you know. So
Speaker 4: there's no doubt in my mind that it is influencing.
Speaker 3: Where people choose to travel.
Speaker 4: We are have become a much higher cost destination than
Speaker 4: we were in the past, still very desirable and we're
Speaker 4: still getting good and bound tourism, but that is a
Speaker 4: friction point.
Speaker 1: I think all of this makes me think, like I said,
Speaker 1: how on earth do you sort of keep turning up
Speaker 1: with a smile on your face then when it feels
Speaker 1: this challenging. I mean, any aircraft that sets out without
Speaker 1: knowing when it's going to land, where it's going to
Speaker 1: land is in some real.
Speaker 4: We're an airline that's been around for eighty five years.
Speaker 4: There's a huge amount of pride in the airline is
Speaker 4: it is an amazing place to work. A lot of
Speaker 4: our workforce because they are aeronautically minded, with the single
Speaker 4: biggest employer in the country by a long way of
Speaker 4: people in this industry. We've got a lot of people
Speaker 4: on the staff who have been with the company for
Speaker 4: twenty years, like me, thirty forty fifty. In fact, I
Speaker 4: have a member of staff who has celebrated sixty years
Speaker 4: with the company. This sort of huge commitment to the cause.
Speaker 4: People A lot of people on the staff have seen
Speaker 4: the various ups and downs through the years, and there
Speaker 4: have been people are philosophical. I think about where we're
Speaker 4: at in the cycle. We have a good plan going forward,
Speaker 4: great fleet plan, great product, you know, the wide body
Speaker 4: fleet at the moment, it's just starting now. It's been refreshed.
Speaker 4: We've got four of the fourteen seven eight sevens now
Speaker 4: with the new interiors in them. We fly the flag
Speaker 4: offshore lots of different countries in North America, Japan, North Asia,
Speaker 4: Southeast Asia, Australia, so where one of the country's biggest cheerleaders,
Speaker 4: and people just get a thrill out of that. And
Speaker 4: it doesn't seem no matter how tough the situation is.
Speaker 4: People we just get that fulfillment and pride out of
Speaker 4: representing the country as well as we can, and.
Speaker 3: That's what gets people or keeps people going.
Speaker 1: Okay, Richard Thompson, if we'll return our seats to the
Speaker 1: upright position, I believe that our flight here has ended.
Speaker 1: Thank you for flying Cheesy Shared Lunch this week. If
Speaker 1: you like that, let us know. If there's something else
Speaker 1: you want to know, let us know. And I hope
Speaker 1: you enjoyed that wherever you listen to it straight off
Speaker 1: the app on YouTube. I heart all the places you
Speaker 1: get your podcast. Omit. That's us for this week. H