WEBVTT - Navigating turbulence: Air NZ CEO Greg Foran 0:00:00.280 --> 0:00:03.800 In a situation like ours, if you don't develop some agility, 0:00:04.280 --> 0:00:07.560 you just can't get stuff done. When people see me 0:00:07.760 --> 0:00:10.680 and want to engage with me, and it's not because 0:00:11.080 --> 0:00:15.400 they lost their bag. It's usually about, hey, what can 0:00:15.440 --> 0:00:19.119 we do about getting back to London, for example. In 0:00:19.200 --> 0:00:24.640 all likelihood, the sort of airline ecosystem, in my view, 0:00:25.680 --> 0:00:28.880 is going to be a challenge in some areas like 0:00:29.080 --> 0:00:39.640 engines and spare parts for probably two plus more users. 0:00:40.240 --> 0:00:43.879 Welcome to supplants. Today we look at the most popular 0:00:43.960 --> 0:00:47.440 investment on Cheersy's in New Zealand. I'm here at the 0:00:47.479 --> 0:00:51.160 headquarters in Auckland and I'll be talking to CEO Greek Forum. 0:00:51.560 --> 0:00:54.040 Investing in involves the risk you might lose the money 0:00:54.080 --> 0:00:57.480 you start with. We recommend talking to a licensed financial advisor. 0:00:58.200 --> 0:01:02.040 We also recommend breading products documents before deciding to invest. 0:01:02.320 --> 0:01:04.680 Everything you're about to see and here is current at 0:01:04.680 --> 0:01:05.480 the time of recording. 0:01:05.600 --> 0:01:08.160 Welcome Greg to the program. It's great to be here 0:01:08.240 --> 0:01:12.280 in Auckland at your place in New Zealand. It's been 0:01:12.319 --> 0:01:15.240 a few weeks since the results were out and they're 0:01:15.280 --> 0:01:18.720 always pretty busy for someone like you. There's with our 0:01:18.800 --> 0:01:22.000 national carrier being what a your New Zealanders. There's always 0:01:22.200 --> 0:01:25.960 a fair bit of reaction opinion about what you should 0:01:25.959 --> 0:01:29.200 and shouldn't be doing. How have you found that so far? 0:01:30.680 --> 0:01:35.000 To be honest with you, it's been reasonably as we expected, 0:01:35.040 --> 0:01:38.120 and that's what we endeavored to do. We came in, 0:01:38.680 --> 0:01:42.080 by and large, give or take, in the middle of guidance, 0:01:42.200 --> 0:01:46.680 just above it and above the midpoint. So I've had 0:01:46.720 --> 0:01:50.120 an enjoyable week actually getting around and talking to people, 0:01:50.200 --> 0:01:53.000 adding a bit of color into the results, which is 0:01:53.480 --> 0:01:55.680 really what people are after, because you know, when you 0:01:55.720 --> 0:01:58.800 go from five eighty five million to two hundred and 0:01:58.800 --> 0:02:03.040 twenty two million, ninety million worth of COVID credit, explain 0:02:03.120 --> 0:02:06.320 to us really what's going on? And I enjoy doing that. 0:02:06.680 --> 0:02:10.160 Air New Zealand's got a big base of retail investors. 0:02:10.560 --> 0:02:13.519 The thing about it, though, is that they're not only investors, 0:02:13.720 --> 0:02:17.520 they're often consumers as well. And the reality is most 0:02:17.520 --> 0:02:20.200 of the time it's an emotional buy. So how does 0:02:20.240 --> 0:02:23.600 Air New Zealand balance that and take some responsibility? Yeah? 0:02:23.639 --> 0:02:26.680 I think you do it very carefully, don't you. I 0:02:26.720 --> 0:02:30.640 think Air New Zealand is a little bit unique in 0:02:30.760 --> 0:02:34.520 many aspects, and you know, when you think about those 0:02:34.560 --> 0:02:38.520 five stakeholder groups that we often talk about customers, how 0:02:38.560 --> 0:02:44.560 we in New Zealand, staff, suppliers, community and shareholders. Everything 0:02:45.000 --> 0:02:49.239 is at a different elevation, possibly to many other businesses, 0:02:50.240 --> 0:02:53.800 because you know, the government owns fifty one percent, and 0:02:53.919 --> 0:02:57.400 therefore you know, there's a heck of a lot of people, 0:02:57.600 --> 0:03:01.040 even if they don't directly own shares, in directly owned shares, 0:03:01.160 --> 0:03:03.880 who are also customers and in many cases our staff. 0:03:05.040 --> 0:03:09.120 You know, it's a highly unionized business. It connects with 0:03:09.320 --> 0:03:14.960 twenty ports domestically, thirty internationally. It holds a pride and 0:03:15.240 --> 0:03:20.640 place and joy in people's hearts. It fulfills a really 0:03:20.720 --> 0:03:25.640 important purpose. And you know, and we deal not just 0:03:25.720 --> 0:03:29.240 with the likes of the big boeings and the air buses, 0:03:29.440 --> 0:03:33.120 but you know, we've got about fifteen or twenty local 0:03:33.160 --> 0:03:37.480 companies that produce snacks and beverages on our planes and 0:03:37.960 --> 0:03:42.760 indirectly feed tourism. So we are integral to what happens 0:03:43.080 --> 0:03:46.680 and everything, as I said, comes with this sort of 0:03:46.680 --> 0:03:52.400 elevated level of scrutiny, and there's a really exciting part 0:03:52.480 --> 0:03:54.720 to that because it means you've got a lift your 0:03:54.720 --> 0:03:57.280 performance and then there are some challenging bits if you 0:03:57.280 --> 0:03:57.960 don't get it right. 0:03:58.960 --> 0:04:00.400 So have you got it right so far? 0:04:00.880 --> 0:04:04.720 I think the answer to that is it depends. And 0:04:04.760 --> 0:04:08.040 the reason I say that is that you know, as 0:04:08.080 --> 0:04:12.000 you think about the results that we've had this last year, 0:04:12.040 --> 0:04:14.960 we've come off this five hundred and eighty five million 0:04:15.000 --> 0:04:18.120 dollar profit down to two hundred and twenty two, and 0:04:18.200 --> 0:04:20.559 yet we've done a little bit more flying you would 0:04:20.560 --> 0:04:23.679 expect based on some of the results around the world. 0:04:24.160 --> 0:04:26.040 Why is here in New Zealand not doing a little 0:04:26.080 --> 0:04:29.560 bit better? And really, what we've found this last financial 0:04:29.640 --> 0:04:32.720 year is that we've had to deal with some sustained 0:04:32.760 --> 0:04:38.840 headwinds that you wouldn't necessarily find in every other geography 0:04:39.120 --> 0:04:42.720 or other competitors. And you know, those have been around Fleet. 0:04:43.320 --> 0:04:47.640 They've been around a domestic economy which is tightened and 0:04:48.240 --> 0:04:52.240 continues to be quite tight, and some sort of elevated 0:04:52.600 --> 0:04:57.000 competition which is fundamentally driven by some geopolitical factors. So 0:04:57.880 --> 0:05:00.599 you know, that makes it exciting but also makes it 0:05:00.680 --> 0:05:01.440 challenging and hard. 0:05:01.800 --> 0:05:04.560 You've been with the company since twenty twenty, and it's 0:05:04.600 --> 0:05:06.839 fair to say there's been a number of headwinds in 0:05:06.880 --> 0:05:10.040 that time COVID for instance, and they're like, how would 0:05:10.080 --> 0:05:11.320 you describe the tenure? 0:05:13.040 --> 0:05:16.599 It has been challenging, but you know you're sort of 0:05:16.720 --> 0:05:21.960 either built for these occasions or you're not. And you 0:05:22.000 --> 0:05:24.200 know that's what I've seen over the years, and you know, 0:05:24.240 --> 0:05:26.800 I've had to deal with difficult situations when I was 0:05:26.839 --> 0:05:32.799 in the US running a United States business in China, 0:05:32.920 --> 0:05:36.960 all over the country, you can be pretty challenging. As 0:05:37.200 --> 0:05:40.040 many of your listeners will know, I've spent many years 0:05:40.040 --> 0:05:42.560 in the food business and that comes under a fair 0:05:42.600 --> 0:05:47.880 amount of scrutiny. So this has different challenges, but you know, 0:05:47.960 --> 0:05:51.600 you either get on with it or you don't. And 0:05:52.440 --> 0:05:56.200 you know it's been sort of a hallmark of what 0:05:56.360 --> 0:05:59.440 I represent that you put your head down, you come 0:05:59.520 --> 0:06:02.400 up with a good plan. You must ensure obviously that 0:06:02.440 --> 0:06:05.040 your business has a good culture. You go to look 0:06:05.040 --> 0:06:08.640 after your customers and your staff and believe in what 0:06:08.680 --> 0:06:09.080 you're doing. 0:06:09.520 --> 0:06:12.720 And we do with hindsight, though, is this something you 0:06:12.760 --> 0:06:15.279 would do differently? I mean the industry is quite different. 0:06:15.320 --> 0:06:18.040 You've said, there's the similarities no matter what business are 0:06:18.080 --> 0:06:18.719 you're leading. 0:06:19.279 --> 0:06:23.279 Yeah, many many things, And you know I went through 0:06:23.320 --> 0:06:26.560 this period because literally in the room where we're doing 0:06:26.600 --> 0:06:30.280 this podcast, I sat on I think it was Monday, 0:06:30.440 --> 0:06:35.040 the fourth of February twenty twenty, and on the previous day, 0:06:35.120 --> 0:06:38.320 the Sunday, we stopped flying to Shanghai. So I was 0:06:38.360 --> 0:06:41.599 sitting in this room and meeting with the leadership squad, 0:06:42.279 --> 0:06:45.200 and it was sort of Okay, one router is down, 0:06:45.360 --> 0:06:48.760 and you know, within two weeks, three or four routes 0:06:48.760 --> 0:06:51.880 were down. Within five weeks we'd stopped flying all together 0:06:51.920 --> 0:06:55.919 in the country was in lockdown. And I can absolutely 0:06:55.960 --> 0:06:59.839 recall at that time, going, boy, I wish I knew 0:07:00.000 --> 0:07:03.640 a lot more about airlines at this point. I'd have 0:07:03.720 --> 0:07:06.960 to say that about two years later, when we were 0:07:07.000 --> 0:07:11.400 still effectively in lockdown, we had periods where we were open, shut, 0:07:11.640 --> 0:07:15.680 paused open, you know, and people forget that, but we 0:07:15.720 --> 0:07:18.800 were on again, off again. We were green lights, red lights, 0:07:18.840 --> 0:07:23.520 orange lights. I realized actually that there were there wasn't 0:07:23.560 --> 0:07:26.160 really any playbook for this, and so in some ways 0:07:26.400 --> 0:07:29.880 I wasn't possibly as disadvantaged as I thought I was 0:07:29.920 --> 0:07:32.880 at the beginning. But there are some things. Number One, 0:07:33.920 --> 0:07:36.800 it is way harder restarting an airline than it is 0:07:36.840 --> 0:07:42.080 stopping it. So would I have been so quick to 0:07:42.320 --> 0:07:45.800 take some of the people out of the business. And 0:07:45.840 --> 0:07:49.600 the answer is, I would have understood what roles are 0:07:49.680 --> 0:07:55.120 much harder to operate and replace, and I would not 0:07:55.240 --> 0:07:58.880 have been as quick as judicious as getting that out. 0:07:59.240 --> 0:08:04.680 So you know that it's an example of learning understanding 0:08:04.720 --> 0:08:07.040 the supply chain a little bit more about what would 0:08:07.120 --> 0:08:11.560 happen in terms of parts and pieces, and you know, 0:08:11.800 --> 0:08:14.520 ensuring that we could get as close as we could 0:08:14.600 --> 0:08:17.800 to some of these suppliers and manufacturers. And I'm not 0:08:17.880 --> 0:08:22.000 just talking about Boeing or Airbus, but you know, Saffron 0:08:22.200 --> 0:08:25.400 is a massive supplier, so so getting in close with 0:08:25.480 --> 0:08:28.520 them and understanding we might have a problem with the 0:08:28.560 --> 0:08:32.000 actuators and the business class seats and they're a little 0:08:32.040 --> 0:08:36.200 electric motor that moves the seats up and down. You know, 0:08:36.280 --> 0:08:39.839 I realize that my knowledge of that wasn't as deep 0:08:40.080 --> 0:08:42.480 as I would have wanted. And I can tell you 0:08:42.520 --> 0:08:46.160 as as some of these events, you know, you get 0:08:46.480 --> 0:08:50.359 little microcosms of them play out. You learn. So for example, 0:08:50.960 --> 0:08:52.840 you know, we're not going to be back in Vanuatu 0:08:52.880 --> 0:08:57.760 anytime soon. You know, we were flying into there, into 0:08:57.800 --> 0:09:01.800 New Maya. It's been you know, extended in terms of 0:09:02.600 --> 0:09:05.600 closing that area down. We'll keep the people on things 0:09:05.800 --> 0:09:08.200 because I know how hard it is to restart. 0:09:08.559 --> 0:09:11.720 Thinking of the headwinds you've you've talked about a few 0:09:11.960 --> 0:09:14.839 headwinds can be things you may have some control over 0:09:15.080 --> 0:09:17.480 or not. Says with the economy, with inflation, that was 0:09:17.520 --> 0:09:20.360 a big part of what happened with the result. Is 0:09:20.400 --> 0:09:23.360 there or are the headwinds that you do think you 0:09:23.440 --> 0:09:26.600 can work with that you can hedge four you can 0:09:27.480 --> 0:09:28.960 make some headway with if you like. 0:09:29.480 --> 0:09:32.439 Well, I think the answer to that is yes, and 0:09:33.000 --> 0:09:36.680 where we can I think we're doing a reasonable job 0:09:36.760 --> 0:09:39.840 of doing that. So you know, as we saw things 0:09:40.000 --> 0:09:44.040 tighten up a bit as early as sort of August 0:09:44.400 --> 0:09:47.080 of last year, so over a year ago. You know, 0:09:47.120 --> 0:09:49.640 we've gone through the FIFA World Cup, we'd had a 0:09:49.679 --> 0:09:52.440 pretty good July, and we could see coming into an 0:09:52.480 --> 0:09:56.160 election things we're going to get tight. We were hearing that, 0:09:56.440 --> 0:09:59.040 you know, should there be a change in government, spending 0:09:59.040 --> 0:10:01.880 would come down. So you know, you start preparing yourself 0:10:01.920 --> 0:10:05.440 for trimming your sales a bit, so you do that. 0:10:05.840 --> 0:10:09.200 There's always opportunities and productivity. You know, we've spent a 0:10:09.240 --> 0:10:12.520 lot of time over the last few years working on 0:10:12.880 --> 0:10:15.559 areas of the business where we know if we give 0:10:15.600 --> 0:10:19.040 people the right tools, then they can be more productive. Now, 0:10:19.040 --> 0:10:22.400 some of those are physical tools like ground service equipment, 0:10:22.800 --> 0:10:25.840 you know, getting the right pushback tugs or pallette loaders. 0:10:26.200 --> 0:10:30.720 Others can be things like replatforming the call center so 0:10:30.840 --> 0:10:34.600 that you've got a much better process there for handling calls. 0:10:34.600 --> 0:10:36.840 You know, we used to have about eight hundred people 0:10:36.880 --> 0:10:39.320 working in the call center. We've got that down to 0:10:39.400 --> 0:10:42.800 five hundred, and there is room to go even further, 0:10:43.240 --> 0:10:46.480 not just because of that tool, but because we also 0:10:46.600 --> 0:10:50.960 replatform the customer app. There's now considerably more things that 0:10:51.000 --> 0:10:54.080 customers can do self service. So we've reduced the call 0:10:54.160 --> 0:10:57.920 volume from sort of, you know, fifty thousand calls a 0:10:57.960 --> 0:11:00.679 week down to about twenty five thousand a week. So 0:11:01.160 --> 0:11:03.680 you're always looking at the things that you can control 0:11:04.320 --> 0:11:08.520 the ones you can't. You know, sometimes you just have 0:11:08.600 --> 0:11:09.880 to stomach those and move on. 0:11:10.920 --> 0:11:12.880 One of the ones that sounds like it's hard to 0:11:12.920 --> 0:11:17.280 control is getting new aircraft with Boeing, and you know, 0:11:17.320 --> 0:11:20.640 you've got the NEOs and the Dreamliners, and at one 0:11:20.679 --> 0:11:23.880 stage you had one billion worth of assets on the tarmac, 0:11:23.960 --> 0:11:27.080 not flying. You've talked at link about you know, what 0:11:27.160 --> 0:11:30.280 had happened and the like. Where is that going in future? 0:11:30.280 --> 0:11:33.200 I mean you've got to buy or put contracts in 0:11:33.240 --> 0:11:38.760 for airlines airliners years and years in advance. So is 0:11:38.800 --> 0:11:41.319 there much scope there to change suppliers or change your 0:11:41.320 --> 0:11:43.720 contracts or have some more certainty. 0:11:44.000 --> 0:11:47.280 Well, I think there's always areas that you can go 0:11:47.320 --> 0:11:50.680 in further. You know, on Sunday, I'll be out of 0:11:50.720 --> 0:11:55.400 the country and I'm heading up to Canada and meeting 0:11:55.559 --> 0:11:59.160 with the owner of d Havland who make the Q 0:11:59.280 --> 0:12:04.360 three hundred. And this particular person bought that airline off 0:12:04.360 --> 0:12:09.960 Bombardier probably about five years ago. You know, we have 0:12:10.000 --> 0:12:12.680 a fleet of Q three hundreds. They aren't making that 0:12:12.720 --> 0:12:16.320 plane anymore. So there's always an opportunity to sit down 0:12:16.400 --> 0:12:19.720 with these people and say, Okay, what is your strategy, 0:12:19.760 --> 0:12:21.520 where are we going to go? What are we going 0:12:21.559 --> 0:12:25.640 to do? You just can't sit there and wait. In 0:12:25.720 --> 0:12:29.160 about three weeks time, I will be in South Carolina 0:12:29.920 --> 0:12:34.480 in the Boeing plant where ideally we're going to get 0:12:35.000 --> 0:12:39.640 our first two of the eight seven eight sevens we've 0:12:39.679 --> 0:12:43.680 had on order and hopefully we'll be able to see 0:12:43.720 --> 0:12:47.679 those come into the country around about October November twenty 0:12:47.880 --> 0:12:50.560 twenty five. But you know, when I go there, I 0:12:50.600 --> 0:12:53.640 will meet with the chief executive of Boeing who's just 0:12:53.720 --> 0:12:58.440 started Kelli and their team and make sure that we're 0:12:58.480 --> 0:13:01.040 on the production line that's things are going to happen. 0:13:01.360 --> 0:13:03.800 By the way, we'll have engineers full time as that 0:13:03.880 --> 0:13:07.440 plane is being built up there, which is standard practice 0:13:07.480 --> 0:13:12.479 for us to ensure that all the specifications meet our specifications. 0:13:13.600 --> 0:13:18.559 So there's always things you can do, but it's hard, 0:13:18.960 --> 0:13:22.240 and you know, if you have a situation like we've 0:13:22.280 --> 0:13:24.640 had with Rolls Royce. We make a decision on a 0:13:24.679 --> 0:13:28.080 Trent engine back in two thousand and four, there were 0:13:28.080 --> 0:13:30.679 two choices. We could have gone with the Ge engine, 0:13:30.679 --> 0:13:32.400 we could have gone with the Trent. We made a 0:13:32.400 --> 0:13:35.080 decision to go with the Trent. We got the first 0:13:35.080 --> 0:13:38.960 of those on a plane back in about twenty fourteen, 0:13:39.800 --> 0:13:44.280 and really since about twenty seventeen, that's been a challenge. Now, 0:13:44.679 --> 0:13:48.480 these are expensive pieces of kit, so to suddenly say, well, 0:13:48.520 --> 0:13:51.480 I've got twenty eight of these engines, because I've got 0:13:51.559 --> 0:13:53.480 fourteen of these planes, I'll tell you what I'm going 0:13:53.520 --> 0:13:55.240 to rip them all off and go and put ge 0:13:55.440 --> 0:13:59.520 engines on them. That is too much to digest. So 0:13:59.760 --> 0:14:01.720 then we've got to sit down with Rolls and say 0:14:02.000 --> 0:14:05.040 how are we going to fix this problem? And it's global. 0:14:05.760 --> 0:14:09.440 You know, there are around about twenty three seven eight 0:14:09.559 --> 0:14:12.400 sevens parked on the ground around the world at the 0:14:12.400 --> 0:14:15.440 moment because there are not enough engines to fly them. 0:14:15.880 --> 0:14:19.000 We had four, but the good news is yesterday we're 0:14:19.040 --> 0:14:21.480 down to three. We were able to get a couple 0:14:21.520 --> 0:14:24.320 of engines, so we've got another one back fly. So 0:14:25.520 --> 0:14:27.680 you got to push, you've got to work at it 0:14:27.720 --> 0:14:31.440 all the time. But you also have to accept that 0:14:31.840 --> 0:14:37.520 in all likelihood the sort of airline ecosystem, in my view, 0:14:38.480 --> 0:14:41.680 is going to be a challenge in some areas like 0:14:41.920 --> 0:14:47.280 engines and spare parts for probably two plus more years. 0:14:48.440 --> 0:14:51.600 Doesn't make any difference that we are the small country 0:14:52.320 --> 0:14:55.800 island in the Pacific. I mean, if we're talking with 0:14:55.840 --> 0:14:58.680 the likes of Boeing and Rolls Royce, they're big players, 0:14:58.720 --> 0:15:00.760 and there's many others in the world who've got much 0:15:00.800 --> 0:15:02.240 more money in might than us. 0:15:02.360 --> 0:15:05.720 Does that factor there's always a risk it does. And 0:15:06.240 --> 0:15:08.480 you know, before I took this job. I was on 0:15:08.520 --> 0:15:11.040 the other end of the scale. I was with a 0:15:11.120 --> 0:15:15.040 business that employed in the US alone, I had one 0:15:15.080 --> 0:15:19.960 point four million staff, you know, five thousand stores. Who 0:15:20.040 --> 0:15:24.320 doesn't want to do the deal with Walmart? The reality, however, 0:15:24.480 --> 0:15:28.440 is that does have a component. But the other part 0:15:28.440 --> 0:15:31.320 of this is how do you bring something to the 0:15:31.400 --> 0:15:36.720 table with your supplier or partner that will excite them. 0:15:36.760 --> 0:15:38.840 And I'll give you an example of how we can 0:15:38.920 --> 0:15:43.120 play in this space. Two examples. Actually, you know, when 0:15:43.120 --> 0:15:47.320 the first of the seven eight sevens come down and 0:15:47.480 --> 0:15:50.400 we start flying them, ideally at the end of next year, 0:15:50.960 --> 0:15:52.680 they're going to have a product on them that no 0:15:52.720 --> 0:15:55.080 one else in the world has got. It's called sky 0:15:55.200 --> 0:16:00.560 nest oh yep. And what's that worth to Boeing? Because 0:16:00.560 --> 0:16:05.560 it's not just the delivery of you know, their seventh, seven, eight, 0:16:05.760 --> 0:16:08.600 seventh for the month, because that's sort of what they'll 0:16:08.640 --> 0:16:11.880 be trying to make seven, eight or nine of these 0:16:11.880 --> 0:16:14.600 planes a month. This is the first in the world. 0:16:14.680 --> 0:16:16.840 And you know, by the way, that fits in with 0:16:16.920 --> 0:16:19.560 our DNA because we were the first to have a 0:16:19.560 --> 0:16:23.160 skycouch on there. So what do you bring to the 0:16:23.280 --> 0:16:28.920 supply that they can't do? Another example. We hope that 0:16:29.000 --> 0:16:33.760 within about four weeks time, around the fourteenth fifteenth of October, 0:16:34.240 --> 0:16:36.440 one of our seven eight sevens will head up to 0:16:36.480 --> 0:16:41.960 Singapore and will begin to retrofit, and this plane should 0:16:42.000 --> 0:16:46.760 be back just before Christmas with a completely new setup 0:16:47.080 --> 0:16:51.440 for seats in business class and premium economy and economy, 0:16:51.960 --> 0:16:56.600 with new entertainment systems, with new galleys and bathrooms. So 0:16:56.640 --> 0:16:59.960 it's one of the existing fourteen seven eight sevens completely 0:17:00.200 --> 0:17:04.600 retrofit it. Here's the interesting thing. We are the first 0:17:04.840 --> 0:17:10.080 company anywhere to have done a retrofit of an old 0:17:10.200 --> 0:17:15.240 plane to that extent before a new one has been built. 0:17:17.040 --> 0:17:19.480 Because normally what you would do is that you would say, 0:17:19.720 --> 0:17:22.080 I've got some new product that I want to put 0:17:22.119 --> 0:17:25.240 on the plane, new seats or new galleys or whatever, 0:17:25.880 --> 0:17:28.600 the next one that's going through the big production line. 0:17:28.640 --> 0:17:29.960 I'm going to get it done there. 0:17:29.960 --> 0:17:30.840 New plane. 0:17:30.960 --> 0:17:35.280 So why did this happen. It happened because we sat 0:17:35.320 --> 0:17:38.320 down with Boeing about three years ago, not long after 0:17:38.400 --> 0:17:41.480 the country had reopened, and we spoke about when we 0:17:41.480 --> 0:17:45.480 were likely to see planes new ones and what we 0:17:45.520 --> 0:17:48.840 could do about retrofits. So they explained to us as 0:17:48.880 --> 0:17:51.080 you would expect. Well, we'll get the new plane off 0:17:51.119 --> 0:17:55.040 and then we'll start thinking about retrofits. And we said, yeah, 0:17:55.040 --> 0:17:58.000 but if you're going to be delayed, this could be 0:17:58.320 --> 0:18:02.360 putting us behind the eight ball. And the other thing 0:18:02.560 --> 0:18:06.199 complication they said to me is we also got a problem. 0:18:06.200 --> 0:18:10.400 We had a thousand engineers between the Ukraine and Russia 0:18:10.600 --> 0:18:12.720 and we've lost all those people because we had to 0:18:12.760 --> 0:18:16.239 go fight in the war. So we don't have a 0:18:16.280 --> 0:18:19.720 whole bunch of technical capability to be able to take 0:18:20.200 --> 0:18:23.560 all the drawings and all the things that have to 0:18:23.600 --> 0:18:26.800 be done so that you can complete a retrofit. So 0:18:27.440 --> 0:18:30.040 go away, go talk to someone else. And we sat 0:18:30.080 --> 0:18:32.720 down with them and said, actually, no, we're going to 0:18:32.720 --> 0:18:34.919 help you design a new process for this. We're going 0:18:34.960 --> 0:18:37.439 to work out how you're going to provide some of 0:18:37.440 --> 0:18:42.280 that intellectual property to a middleman and integrator, and together 0:18:42.400 --> 0:18:48.040 the three of us, between the integrator, yourself and ourselves, 0:18:48.359 --> 0:18:51.159 we're going to work out how to do this before 0:18:51.200 --> 0:18:55.000 we even build a new plane. Now we're on the 0:18:55.000 --> 0:18:59.440 cusp of doing that, but what's that worth deboeing? Well, 0:18:59.480 --> 0:19:01.600 as I said them, if you learn how to do 0:19:01.680 --> 0:19:04.760 this new process with a smaller line down the bottom 0:19:04.800 --> 0:19:08.600 of the world. You've now solved a problem for much 0:19:08.720 --> 0:19:10.280 larger airlines. 0:19:10.520 --> 0:19:14.000 And they've obviously agreed with that. Is it an experiment 0:19:14.160 --> 0:19:14.600 for them. 0:19:14.520 --> 0:19:17.000 You think a little bit. I'm sure, but I can 0:19:17.040 --> 0:19:20.000 tell you they've been pretty happy with how it's going. 0:19:20.040 --> 0:19:21.200 But boy, it's been hard. 0:19:21.480 --> 0:19:21.840 Yeah. 0:19:22.200 --> 0:19:25.200 So you know, every two weeks we're on a VC 0:19:25.840 --> 0:19:30.359 with them and there are probably seven or eight people 0:19:30.400 --> 0:19:32.320 who pretty much for the last six months have had 0:19:32.359 --> 0:19:36.639 to live overseas, getting into Japan to meet with JAMCO, 0:19:36.960 --> 0:19:40.359 or getting into France to meet with Saffran, or in 0:19:40.480 --> 0:19:43.760 Wales where the seats are being built, and they're having 0:19:43.840 --> 0:19:46.480 to can we get this done? And can you talk 0:19:46.520 --> 0:19:50.320 to this person and do that? But heck it, in 0:19:50.359 --> 0:19:53.760 a situation like ours, if you don't develop some agility, 0:19:54.240 --> 0:19:55.600 you just can't get stuff done. 0:19:56.400 --> 0:19:58.439 One of the areas that in New Zealand has was 0:19:58.480 --> 0:20:02.360 always sought to be a trailblaze and was obviously sustainable aviation, 0:20:02.480 --> 0:20:05.639 fuel flying and thinking about target at twenty thirty and 0:20:05.680 --> 0:20:08.520 the like. That's obviously changed in recent times. I mean, 0:20:09.520 --> 0:20:11.960 where is that at in terms of how we could 0:20:11.960 --> 0:20:15.000 come back and be a leader and actually changing the 0:20:15.040 --> 0:20:18.639 dial for an industry that has seen to be polluting 0:20:18.640 --> 0:20:20.359 the atmosphere and warming the planet. 0:20:21.400 --> 0:20:24.159 Well, the first thing I'd say is, actually, I'm not disappointed. 0:20:24.240 --> 0:20:26.720 I'm very proud of the team. Now, Now that may 0:20:26.800 --> 0:20:30.639 seem a bit strange, but you know, the most important 0:20:30.640 --> 0:20:35.159 thing in any business's culture and the ability to you know, 0:20:35.240 --> 0:20:37.840 part of that is the ability to be able to 0:20:37.880 --> 0:20:44.160 have very honest and truthful and unvarnished conversations. So let's 0:20:44.160 --> 0:20:46.160 wind the clock back two and a half years ago 0:20:46.240 --> 0:20:49.800 and we decide that we're going to put in a 0:20:49.920 --> 0:20:53.119 science based target and I think we were the second 0:20:53.119 --> 0:20:55.880 airline in the world to do it. And we sat 0:20:55.920 --> 0:20:58.439 down and we said, okay, what do we think we 0:20:58.560 --> 0:21:01.199 need to do to achieve this? And well, you know, 0:21:01.240 --> 0:21:03.240 this is where the fleet's going to be, and this 0:21:03.280 --> 0:21:06.879 is how many sustainable aviation fuel plants are going to 0:21:06.880 --> 0:21:09.800 be built. These are the routes that we're going to fly, 0:21:10.480 --> 0:21:12.359 This is how we're going to get more productive with 0:21:12.440 --> 0:21:14.560 the flying that we're doing. This is what we're going 0:21:14.600 --> 0:21:18.200 to do with electrifying ground service equipment. You can see 0:21:18.240 --> 0:21:20.600 you build this thing up two and a half years 0:21:20.640 --> 0:21:24.840 ago and you say, based on these assumptions, this is 0:21:24.880 --> 0:21:28.520 where we think will be by twenty thirty. Well, a 0:21:28.520 --> 0:21:30.840 couple of things have changed over those two and a 0:21:30.880 --> 0:21:33.520 half years, you know. One of them is we are 0:21:33.720 --> 0:21:36.639 almost certainly going to have to keep our triple sevens 0:21:36.640 --> 0:21:42.000 a bit longer. Why because Boeing, you know, we placed 0:21:42.000 --> 0:21:43.919 an order. We thought we were going to get that 0:21:44.119 --> 0:21:47.720 order in twenty twenty two. We delayed it for one year, 0:21:47.800 --> 0:21:51.200 so it was initially twenty twenty one, and we said 0:21:51.480 --> 0:21:54.359 to Boeing, look, COVID all the other stuff, delay those 0:21:54.520 --> 0:21:57.760 till twenty twenty two. And they said, that's fine. I've 0:21:57.800 --> 0:22:00.200 just shared with you. The earliest we'll see them is 0:22:00.240 --> 0:22:04.760 the end of twenty twenty five. So the fleet that 0:22:04.800 --> 0:22:07.320 we thought we were going to fly, which was more 0:22:07.359 --> 0:22:11.280 fuel efficient than the Triple sevens, we just can't get 0:22:11.280 --> 0:22:14.800 those planes. So there's no point hiding behind that. That 0:22:15.520 --> 0:22:20.720 is a reality. You know, at some point, if sustainable 0:22:20.760 --> 0:22:26.320 aviation fuel is the solution, and at this stage that 0:22:26.520 --> 0:22:32.679 is the solution. Yeah, right, The current thirty plants or 0:22:32.760 --> 0:22:34.919 so that are around the world need to increase to 0:22:34.960 --> 0:22:39.960 about five thousand. So think about that, thirty plants to 0:22:40.040 --> 0:22:42.720 about five thousand. So as we look at that and 0:22:42.760 --> 0:22:46.280 we say, well, okay, we're we're working really hard at 0:22:46.320 --> 0:22:48.520 the moment. We want to get two percent of our 0:22:48.560 --> 0:22:54.159 fuel being sustainable aviation fuel this year, two percent to 0:22:54.240 --> 0:22:56.920 hit the target in twenty thirty, you've got to believe 0:22:56.960 --> 0:23:00.520 that's going to get to seventeen percent. There's a lot 0:23:00.520 --> 0:23:02.639 of extra plants that have got to get built between 0:23:02.680 --> 0:23:05.840 now and the end of the year. What's going to 0:23:05.840 --> 0:23:09.960 happen in terms of regulation on this, Is it going 0:23:10.000 --> 0:23:14.440 to get mandated or not. So you know what we've 0:23:14.480 --> 0:23:18.320 done is we've said, hey, let's just take a look 0:23:18.359 --> 0:23:20.720 at this, because you've got to put your hand on 0:23:20.760 --> 0:23:23.240 your heart and you've got to say I'm going to 0:23:23.359 --> 0:23:26.639 hit that goal. And if you have some situations that 0:23:26.680 --> 0:23:28.960 have changed, which we have as I've just shared with you, 0:23:29.400 --> 0:23:32.760 the appropriate thing to do is to remove that and 0:23:32.800 --> 0:23:36.680 then to reassess there is no change in the commitment 0:23:36.760 --> 0:23:43.080