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Speaker 1: Pressing the newsmakers to get the real story. It's hither,

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Speaker 1: duper cl and drive with one New Zealand coverage like

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Speaker 1: no one else.

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Speaker 2: USALKIV Afternoon in New Zealand has posted its half year

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Speaker 2: results and it's worse than expected. The net loss is

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Speaker 2: forty million dollars. It's prompted ACT Party leader David Seymour

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Speaker 2: to renew calls for the government to sell its majority

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Speaker 2: stake in the airline in New Zealand. CEO's Nickel Rabashenka Henickel, Hi, Heather,

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Speaker 2: why have you made a loss when Quantus has made

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Speaker 2: a profit of one point seven billion dollars. Yeah.

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Speaker 3: Look, it's a tough result for us, but not unexpected

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Speaker 3: and we'd signaled it. Three things driving that result. One

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Speaker 3: is ongoing grounded aircraft challenge that we've had because of

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Speaker 3: the engine issues. The second is softer than expected demand recovery,

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Speaker 3: particularly here domestically for US in New Zealand, and the

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Speaker 3: third is rising costs. Some of those costs are related

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Speaker 3: to the engine issue, some inefficiencies in the business, A

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Speaker 3: lot of them relate to costs around accessing spare parts

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Speaker 3: for our aircraft and as you know and I've spoken

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Speaker 3: to it about it a fair bit. Fees, levees and

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Speaker 3: landing charges which are inflating above CPI at quite a

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Speaker 3: significant rate. So really that's what's driving the current result.

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Speaker 3: But as I said, it's not unexpected and we have

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Speaker 3: signaled it.

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Speaker 2: What is it going to take to turn this around?

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Speaker 2: What do you need to do?

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Speaker 3: Yeah, look, that's a good question. There are sort of

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Speaker 3: three big buckets of things that we're already doing. The

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Speaker 3: first is getting our aircraft backflying. We've eight aircraft parked

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Speaker 3: up and you know, we've been dealt in unlucky hand

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Speaker 3: as far as that's concerned. We have two engines on

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Speaker 3: both our narrow bodies and wide bodies that have issues

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Speaker 3: global issues. We're one of two airlines in the world

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Speaker 3: that are exposed to this issue, US in Ana and Japan.

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Speaker 3: But we've had a bit of a breakthrough so Rolls

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Speaker 3: Royce the fix that they've finally put into those engines

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Speaker 3: seem to be working. We're going from about eight hundred

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Speaker 3: and fifty cycles or takeoffs and landing still about two

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Speaker 3: and a half two to two and a half thousand.

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Speaker 3: That's a very market improvement on Pratt and Whitney. Over

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Speaker 3: the last couple of months, we've negotiated a pretty good

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Speaker 3: deal where we get two of our aircraft back from

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Speaker 3: them so we can fly those. So by the end

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Speaker 3: of this year, off that at eight aircraft that are

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Speaker 3: currently grounded, four of them will be back up and

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Speaker 3: flying again. This is also the same period where we

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Speaker 3: get finally the two new seven eight sevens delivered. These

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Speaker 3: are meant to have been delivered in twenty twenty two,

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Speaker 3: so we've been waiting for them for a while now,

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Speaker 3: and so having those aircraft back means for the first

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Speaker 3: time in six years, we can start thinking about growth.

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Speaker 3: And for an airline like us, growth is everything. We

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Speaker 3: do need to grow to make sure we can distribute

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Speaker 3: the cost fixed costs we have, we can put more capacity,

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Speaker 3: we can go to new places.

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Speaker 2: Sos is that the first one. That's the first the

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Speaker 2: two other buckets.

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Speaker 3: The second thing is in my first week, I've asked

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Speaker 3: the business to we're basically doing a strategic reset, so

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Speaker 3: we're reviewing all parts of the business.

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Speaker 2: Does that mean you're reviewing roots?

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Speaker 3: We are.

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Speaker 2: Would you if you found that there are roots that

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Speaker 2: are unprofitable and there are definitely roots that are unprofitable, yes,

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Speaker 2: do you want to cut them?

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Speaker 3: Well, we run a full service network, so every full

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Speaker 3: service airline in the world has a spread of roots

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Speaker 3: as far as profitability is concerned, So we look at

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Speaker 3: individual profitability of individual routes, but we also look at

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Speaker 3: the network effect of having that route in place. Does

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Speaker 3: it feed another more profitable route, et cetera.

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Speaker 2: Ye, but by and large.

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Speaker 3: We'll be taking a look at every route and making

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Speaker 3: sure that as a network, the whole thing happens.

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Speaker 2: Do you prepared to cut root snuckle?

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Speaker 3: That We do that as general course of business all

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Speaker 3: the time, and we'll continue to keep doing that, you know,

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Speaker 3: as any airline needs to do.

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Speaker 2: Okay, yes, you've got your hand like you want to

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Speaker 2: say something else.

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Speaker 3: Well, the other thing, I think that's very important, and

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Speaker 3: you and I have talked about this previously, and that's

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Speaker 3: the third bucket is you know, a New Zealand does

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Speaker 3: well when we fulfill one fundamental promise we have for

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Speaker 3: our customers, which is punctual service. So a lot of

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Speaker 3: focus is going into making sure that our operational performance

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Speaker 3: is really where it needs to be.

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Speaker 2: Because I mean, that's your point of difference with jetstaff

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Speaker 2: totally has David Simol got a point here when he says,

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Speaker 2: go woke, go broke. Have you guys got yourself a

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Speaker 2: little too distracted by all that kind of nonsense?

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Speaker 3: Look, I get it. It's politics.

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Speaker 2: No, it's not politics, Nicol, it's a customer experience. The

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Speaker 2: customer experience is that you go into the Corru club.

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Speaker 2: And I mean this sounds petty, but it's important. You

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Speaker 2: can't even take a paper cup with your coffee you're

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Speaker 2: in a rush. You can't even take the paper cup

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Speaker 2: with your coffee onto a plane where they give you

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Speaker 2: another paper cup on a plane. Right, And this is

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Speaker 2: about the environment, that kind of stuff, because what happens

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Speaker 2: there is it reduces the premium offering that you've got,

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Speaker 2: which means but eventually the Coral Club doesn't matter. You

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Speaker 2: just start flying Jetstar, Right? Has that kind of stuff

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Speaker 2: tripped you up? Worrying about an electric plane you don't

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Speaker 2: even you've been trialing it, you don't even know how

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Speaker 2: to deploy it in your fleet. Worrying about sustainable aviation

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Speaker 2: fuel all the time, which is miles more expensive than

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Speaker 2: what you're paying for general fuel. Is all of the

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Speaker 2: stuff tripping you guys up, When you should just be

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Speaker 2: focusing on flying the existing planes.

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Speaker 3: No, it's not distracting us. I know from the outside

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Speaker 3: it might look like it might be distracting us. I

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Speaker 3: can assure you as the CEO of the company, it

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Speaker 3: is far from distracting us. I think the point you

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Speaker 3: make around getting back to the fundamentals of the business

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Speaker 3: is a very important point. You know, as far as

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Speaker 3: our customer experience is concerned, knowing the key customer segments

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Speaker 3: that we serve and making sure that our offering is

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Speaker 3: aligned to them is very important. We are world renowned

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Speaker 3: for our uniquely Kiwi service and we are great at it,

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Speaker 3: but that's not something we can take for granted. So

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Speaker 3: a lot of our focus in this next is going

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Speaker 3: into how do we refresh our service proposition? Do we

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Speaker 3: have the right product on board? That's why coming into

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Speaker 3: this role, I've also extended that retrofit program where we're

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Speaker 3: putting new seats and new galleys and new screens and

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Speaker 3: so on. Yeah, also into our Triple seven product because

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Speaker 3: on the wide body fleet, you know, having a world

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Speaker 3: class product on board our aircraft is mission critical.

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Speaker 2: Yeah, stuff that works and isn't broken, which is what

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Speaker 2: people are complaining about Okay, so if you're doing all

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Speaker 2: the stuff that's going to turn it around, does this

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Speaker 2: mean it'll be a profit next year?

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Speaker 3: The road to profitability is one where you know will

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Speaker 3: you will see huge improvement and business performance next year.

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Speaker 3: But really what we're aiming to get to is anywhere

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Speaker 3: between six to eight percent EBIT margin.

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Speaker 2: So this doesn't sound like it's a profit next year.

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Speaker 2: When is your goal for a profit?

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Speaker 3: Well, we will start to be profitable from next year

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Speaker 3: if everything goes to plan. And you know, we are

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Speaker 3: working in an environment where we don't control all of

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Speaker 3: the variables. That's why you see me advocating as often

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Speaker 3: as I do for a fair, affordable, future fit aviation

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Speaker 3: system for New Zealand for example. So those things we

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Speaker 3: don't control ourselves, and we can't pass all of those

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Speaker 3: costs onto our customers. So we do need everyone around

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Speaker 3: who participates in the system to tighten their belts and

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Speaker 3: make sure that we do have the right aviation system settings.

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Speaker 3: That said, you know, we think that over the next

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Speaker 3: two to three years we're well on our part to recovery.

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Speaker 3: One of the key reasons I say that so confidently

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Speaker 3: is for the first time in six years, we've got

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Speaker 3: new aircraft coming back into the fleet and we're solving

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Speaker 3: engine issues. Trust me, everyone of my eleven and a

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Speaker 3: half thousand colleagues have been waiting for the day where

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Speaker 3: we stop talking about engine issues. We're sick and tired

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Speaker 3: of it.

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Speaker 2: Nicol, thank you for your time. Appreciated, Nichol revshanke In,

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Speaker 2: New Zealand's Chief executive.

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