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Speaker 1: The troubles that in New Zealand have been having played

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Speaker 1: out in number for yesterday as a half year result,

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Speaker 1: got release profits down eighteen percent to one hundred and

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Speaker 1: six million. Are they found out that basically if your

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Speaker 1: engines don't work, the planes have trouble getting off the ground.

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Speaker 1: Air New Zealand's Tube executive Greg four And is back

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Speaker 1: with us. Very good morning to you, Good morning, glass

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Speaker 1: half full. It could have been worse? Is that fair?

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Speaker 2: No? I would actually say Mike that I'm pretty proud

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Speaker 2: of the result that Air New Zealand's has delivered for

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Speaker 2: the half you know, when you consider the amount of

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Speaker 2: aircraft we hadn't been able to get, it's a bit

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Speaker 2: like playing a rugby match without your front row. And

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Speaker 2: I'm really proud of the way that our team have

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Speaker 2: stepped up. I think they've done a terrific job.

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Speaker 1: When does the trouble end.

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Speaker 2: Probably two to three years. Unfortunately, there's a pretty long

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Speaker 2: lead time. There's probably about two thousand aircraft that have

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Speaker 2: got to get built between Boeing and air Bus, and

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Speaker 2: on top of that we've got Rolls Royce with a

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Speaker 2: few challenges, Pratt and Whitney with challenges and you know,

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Speaker 2: once again I say, you've got to work through it.

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Speaker 2: It's not going to get fixed quickly. But I think

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Speaker 2: the team is doing a very good job actually managing

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Speaker 2: and what are pretty challenging circumstances.

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Speaker 1: What's your biggest problem the engines or the new planes

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Speaker 1: you aren't getting?

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Speaker 2: Primarily, I would say the engines first up. We're heading

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Speaker 2: into a period mic where we're going to have eleven

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Speaker 2: of our aircraft unavailable. That's going to be about seven

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Speaker 2: thousand seats a day. We have to cover that by

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Speaker 2: bringing in least aircraft. We're actually as recently as yesterday

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Speaker 2: scrambling around to try and get another what we call

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Speaker 2: wet leaf aircraft. So that's where you know, a set

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Speaker 2: of crew, including the pilots, actually come in and fly

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Speaker 2: because we just cannot get enough engines out of rolls

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Speaker 2: Royce and Pratt and Whitneys.

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Speaker 1: I have tremendous Are you being paid by them by

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Speaker 1: way of compensation? I read a number. It was, but

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Speaker 1: it didn't make up for the loss your your suffering,

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Speaker 1: does it?

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Speaker 2: That's correct? So they did. They paid us just over

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Speaker 2: ninety million dollars for the first half, and you're right.

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Speaker 2: It doesn't make up for what we're missing. There would

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Speaker 2: be over another forty million that we have that we

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Speaker 2: have to incur. But you know that doesn't include what

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Speaker 2: it does to your reputation, and that's what worries me

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Speaker 2: so most. You know, because people get on a plane,

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Speaker 2: it may not be any New Zealand plane or it's

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Speaker 2: an older plane, and we're having to scramble harder and

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Speaker 2: you know, and what that means is that the operation

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Speaker 2: doesn't run as well. You know, the Swiss watch that

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Speaker 2: I often talk about internally is not quite as accurate

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Speaker 2: as we want it to be. But I can tell

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Speaker 2: you we are striving to do this and we're not

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Speaker 2: sitting on our hands, not for one day.

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Speaker 1: There are a couple of I mean, you can do it,

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Speaker 1: slice it up different ways. The domestic reputation seems to

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Speaker 1: be really troubled. Is your domestic network affected by engines.

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Speaker 2: Indirectly? It is because in order to cover the fact

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Speaker 2: that we are six of our ear bars a three

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Speaker 2: twenty ones down our best aircraft, we're asking the regional

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Speaker 2: turbo props to fly harder. And you know by that,

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Speaker 2: I mean having to do sectors that you wouldn't ask

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Speaker 2: them to do so that puts a bit of pressure

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Speaker 2: on parts and maintenance and people. The good news is

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Speaker 2: we track this every single day and I can tell

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Speaker 2: you I get as frustrated as anyone I see every

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Speaker 2: single cancelation that comes through in this business. The good

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Speaker 2: news is we're making some real headway and actually since

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Speaker 2: the beginning of the year there had not been too

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Speaker 2: many cancelations. In fact, cancelations for year to date are running.

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Speaker 2: It just to tad over one percent into three averages two.

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Speaker 2: We went through a period just before Christmas.

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Speaker 1: I'm looking at the seventy two seventy four percent on

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Speaker 1: time takeoff landing. That was your problem because that fell

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Speaker 1: off from November, didn't.

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Speaker 2: It's November wasn't great. And you know those stats are public.

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Speaker 2: We share them with the mot and you know, look,

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Speaker 2: they may be better than some others, but that's not

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Speaker 2: the benchmark that we set an Near New Zealand. We

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Speaker 2: want that number actually to be about eighty three percent.

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Speaker 2: The good news is since January, that's what we've been delivering.

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Speaker 1: The I know this is rough, but for the purposes

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Speaker 1: of this interview, I look at Singapore, Emirates, Quantus, United, Katar,

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Speaker 1: career in terms of revenue and their profit. They're doing

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Speaker 1: many times more profit off revenue than you are. Why.

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Speaker 2: Two things, They're not dealing with the same economic situation

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Speaker 2: that we are. You know, our government spend on the

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Speaker 2: domestic airline is significant, a significant portion. That is down

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Speaker 2: twenty five percent. Corporate spend is a significant portion of

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Speaker 2: domestic that's down ten. Second thing, they're not dealing with

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Speaker 2: the same engine issues. See, it all depends what model

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Speaker 2: engine you have on your plane. We unfortunately had the

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Speaker 2: two that is most troubled at the moment.

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Speaker 1: So that will part dumb luck.

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Speaker 2: It will pass, Yeah.

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Speaker 1: Of course it will. But that's just because that was

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Speaker 1: my next question. None of these people seem to have

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Speaker 1: the problems you do. Is that just sheer dumb luck?

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Speaker 1: We bought the wrong planes.

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Speaker 2: Well, it's easy in hindsight to say, you know, maybe

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Speaker 2: we shouldn't have bought the Trent one thousand and we

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Speaker 2: should have bought, you know, the gen X engine, which

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Speaker 2: is a general electric engine. We made that decision back

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Speaker 2: in two thousand and four. We put it on a

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Speaker 2: plane in twenty and fourteen. We had troubles with it.

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Speaker 2: In twenty and seventeen, and that trouble continues they have

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Speaker 2: to solve. I can't go back that far in two

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Speaker 2: thousand and four, but it is what it is.

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Speaker 1: Well, I get that, so you got to do it.

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Speaker 1: But it's an amazing thing that we appear to be

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Speaker 1: the only airline in the world that made it that poorly,

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Speaker 1: doesn't it? I mean somebody else who had the same problems,

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Speaker 1: But you can't. So somebody somewhere made a massive cockup.

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Speaker 2: I can. I can give you the names of those

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Speaker 2: so I can tell you that Whizair in Europe is

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Speaker 2: comparing all they've.

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Speaker 1: Got, Greg, we can't compare ourselves to wizir. Is that

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Speaker 1: what this has come down to. I've given you. I'm

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Speaker 1: giving you the airlines are flying to the country, Singapore, Emirates, Quantas,

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Speaker 1: Qatar United. These are our competitors. Whizzya doesn't fly here.

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Speaker 2: Well, you know what I will say is that some

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Speaker 2: of that is also scale mic. You know, when you

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Speaker 2: run a smaller airline relatively, which is what we do,

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Speaker 2: you can't afford to go and spread yourself with having

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Speaker 2: like four different engines on a fleet. You've got all

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Speaker 2: that extra tooling and all the other things. Because our

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Speaker 2: white bodied fleet is circa just over twenty. If you're

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Speaker 2: running a business like United and you've got six hundred

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Speaker 2: wide bodies, then you spread your bets. We generally have

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Speaker 2: to take one or two bets. So we have Boeing

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Speaker 2: on the wide body, Airbus on the narrowbody. That's appropriate.

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Speaker 2: We run a Trent on the wide bodied and we

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Speaker 2: run Pratt and Whitney on the narrowbody. That's the right

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Speaker 2: sort of decision making for an airline of our size,

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Speaker 2: but it leaves you a bit vulnerable if things start

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Speaker 2: to get tough.

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Speaker 1: Okay, I understand that. Look I have simply with your situation.

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Speaker 1: It's just that you can imagine the text I get

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Speaker 1: on a regular basis about any New Zealand's verious service.

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Speaker 1: Two quick questions. London is it back and when?

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Speaker 2: Probably two and a half years, dependent on delivery from Boeing.

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Speaker 2: We expect to get first new planes about the middle

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Speaker 2: of next year. We want to boost up our services

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Speaker 2: to New York and London is on the list. We

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Speaker 2: do have the ability to go there. We do have

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Speaker 2: slots that are available right.

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Speaker 1: Second question was I read an article in the Sydney

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Speaker 1: Morning Herald and this is just one of many. At

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Speaker 1: the moment, they are piling first class seats back into

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Speaker 1: planes as fast as they possibly can. Internationally, people are

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Speaker 1: prepared to pay seemingly any amount of money to fly

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Speaker 1: in luxury. Is what you're doing with the referb of

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Speaker 1: the airline going to miss the market buy some margin?

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Speaker 2: Absolutely not great question. Good news is you know in

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Speaker 2: about four weeks time, maybe you and I'll have a

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Speaker 2: chat because by then the first of our retrofits comes

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Speaker 2: back in. Well, it's been hard work getting that done.

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Speaker 2: We're right on the cusp of getting the first one

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Speaker 2: that does have all the new product in it included,

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Speaker 2: and that is what we call an ELITK front row.

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Speaker 2: When our customers get on there, you're going to see

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Speaker 2: about a thirty percent increase in premium. But having said that,

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Speaker 2: the whole plane has been retrofitted in the latest and greatest.

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Speaker 2: We'll also have a new uniforms on it. It's going

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Speaker 2: to be great and we haven't missed the mark at all.

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Speaker 2: I think we're well timed for it and the business

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Speaker 2: is in a great position.

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Speaker 1: All right, good to talk to you. Appreciate it very much.

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Speaker 1: Greg Boran, who is the New Zealand chief executive.

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Speaker 2: For more from the mic Asking Breakfast, listen live to

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