Speaker 1: In a situation like ours, if you don't develop some agility,
Speaker 1: you just can't get stuff done. When people see me
Speaker 1: and want to engage with me, and it's not because
Speaker 1: they lost their bag. It's usually about, hey, what can
Speaker 1: we do about getting back to London, for example. In
Speaker 1: all likelihood, the sort of airline ecosystem, in my view,
Speaker 1: is going to be a challenge in some areas like
Speaker 1: engines and spare parts for probably two plus more users.
Speaker 2: Welcome to supplants. Today we look at the most popular
Speaker 2: investment on Cheersy's in New Zealand. I'm here at the
Speaker 2: headquarters in Auckland and I'll be talking to CEO Greek Forum.
Speaker 3: Investing in involves the risk you might lose the money
Speaker 3: you start with. We recommend talking to a licensed financial advisor.
Speaker 3: We also recommend breading products documents before deciding to invest.
Speaker 3: Everything you're about to see and here is current at
Speaker 3: the time of recording.
Speaker 2: Welcome Greg to the program. It's great to be here
Speaker 2: in Auckland at your place in New Zealand. It's been
Speaker 2: a few weeks since the results were out and they're
Speaker 2: always pretty busy for someone like you. There's with our
Speaker 2: national carrier being what a your New Zealanders. There's always
Speaker 2: a fair bit of reaction opinion about what you should
Speaker 2: and shouldn't be doing. How have you found that so far?
Speaker 1: To be honest with you, it's been reasonably as we expected,
Speaker 1: and that's what we endeavored to do. We came in,
Speaker 1: by and large, give or take, in the middle of guidance,
Speaker 1: just above it and above the midpoint. So I've had
Speaker 1: an enjoyable week actually getting around and talking to people,
Speaker 1: adding a bit of color into the results, which is
Speaker 1: really what people are after, because you know, when you
Speaker 1: go from five eighty five million to two hundred and
Speaker 1: twenty two million, ninety million worth of COVID credit, explain
Speaker 1: to us really what's going on? And I enjoy doing that.
Speaker 2: Air New Zealand's got a big base of retail investors.
Speaker 2: The thing about it, though, is that they're not only investors,
Speaker 2: they're often consumers as well. And the reality is most
Speaker 2: of the time it's an emotional buy. So how does
Speaker 2: Air New Zealand balance that and take some responsibility? Yeah?
Speaker 1: I think you do it very carefully, don't you. I
Speaker 1: think Air New Zealand is a little bit unique in
Speaker 1: many aspects, and you know, when you think about those
Speaker 1: five stakeholder groups that we often talk about customers, how
Speaker 1: we in New Zealand, staff, suppliers, community and shareholders. Everything
Speaker 1: is at a different elevation, possibly to many other businesses,
Speaker 1: because you know, the government owns fifty one percent, and
Speaker 1: therefore you know, there's a heck of a lot of people,
Speaker 1: even if they don't directly own shares, in directly owned shares,
Speaker 1: who are also customers and in many cases our staff.
Speaker 1: You know, it's a highly unionized business. It connects with
Speaker 1: twenty ports domestically, thirty internationally. It holds a pride and
Speaker 1: place and joy in people's hearts. It fulfills a really
Speaker 1: important purpose. And you know, and we deal not just
Speaker 1: with the likes of the big boeings and the air buses,
Speaker 1: but you know, we've got about fifteen or twenty local
Speaker 1: companies that produce snacks and beverages on our planes and
Speaker 1: indirectly feed tourism. So we are integral to what happens
Speaker 1: and everything, as I said, comes with this sort of
Speaker 1: elevated level of scrutiny, and there's a really exciting part
Speaker 1: to that because it means you've got a lift your
Speaker 1: performance and then there are some challenging bits if you
Speaker 1: don't get it right.
Speaker 2: So have you got it right so far?
Speaker 1: I think the answer to that is it depends. And
Speaker 1: the reason I say that is that you know, as
Speaker 1: you think about the results that we've had this last year,
Speaker 1: we've come off this five hundred and eighty five million
Speaker 1: dollar profit down to two hundred and twenty two, and
Speaker 1: yet we've done a little bit more flying you would
Speaker 1: expect based on some of the results around the world.
Speaker 1: Why is here in New Zealand not doing a little
Speaker 1: bit better? And really, what we've found this last financial
Speaker 1: year is that we've had to deal with some sustained
Speaker 1: headwinds that you wouldn't necessarily find in every other geography
Speaker 1: or other competitors. And you know, those have been around Fleet.
Speaker 1: They've been around a domestic economy which is tightened and
Speaker 1: continues to be quite tight, and some sort of elevated
Speaker 1: competition which is fundamentally driven by some geopolitical factors. So
Speaker 1: you know, that makes it exciting but also makes it
Speaker 1: challenging and hard.
Speaker 2: You've been with the company since twenty twenty, and it's
Speaker 2: fair to say there's been a number of headwinds in
Speaker 2: that time COVID for instance, and they're like, how would
Speaker 2: you describe the tenure?
Speaker 1: It has been challenging, but you know you're sort of
Speaker 1: either built for these occasions or you're not. And you
Speaker 1: know that's what I've seen over the years, and you know,
Speaker 1: I've had to deal with difficult situations when I was
Speaker 1: in the US running a United States business in China,
Speaker 1: all over the country, you can be pretty challenging. As
Speaker 1: many of your listeners will know, I've spent many years
Speaker 1: in the food business and that comes under a fair
Speaker 1: amount of scrutiny. So this has different challenges, but you know,
Speaker 1: you either get on with it or you don't. And
Speaker 1: you know it's been sort of a hallmark of what
Speaker 1: I represent that you put your head down, you come
Speaker 1: up with a good plan. You must ensure obviously that
Speaker 1: your business has a good culture. You go to look
Speaker 1: after your customers and your staff and believe in what
Speaker 1: you're doing.
Speaker 2: And we do with hindsight, though, is this something you
Speaker 2: would do differently? I mean the industry is quite different.
Speaker 2: You've said, there's the similarities no matter what business are
Speaker 2: you're leading.
Speaker 1: Yeah, many many things, And you know I went through
Speaker 1: this period because literally in the room where we're doing
Speaker 1: this podcast, I sat on I think it was Monday,
Speaker 1: the fourth of February twenty twenty, and on the previous day,
Speaker 1: the Sunday, we stopped flying to Shanghai. So I was
Speaker 1: sitting in this room and meeting with the leadership squad,
Speaker 1: and it was sort of Okay, one router is down,
Speaker 1: and you know, within two weeks, three or four routes
Speaker 1: were down. Within five weeks we'd stopped flying all together
Speaker 1: in the country was in lockdown. And I can absolutely
Speaker 1: recall at that time, going, boy, I wish I knew
Speaker 1: a lot more about airlines at this point. I'd have
Speaker 1: to say that about two years later, when we were
Speaker 1: still effectively in lockdown, we had periods where we were open, shut,
Speaker 1: paused open, you know, and people forget that, but we
Speaker 1: were on again, off again. We were green lights, red lights,
Speaker 1: orange lights. I realized actually that there were there wasn't
Speaker 1: really any playbook for this, and so in some ways
Speaker 1: I wasn't possibly as disadvantaged as I thought I was
Speaker 1: at the beginning. But there are some things. Number One,
Speaker 1: it is way harder restarting an airline than it is
Speaker 1: stopping it. So would I have been so quick to
Speaker 1: take some of the people out of the business. And
Speaker 1: the answer is, I would have understood what roles are
Speaker 1: much harder to operate and replace, and I would not
Speaker 1: have been as quick as judicious as getting that out.
Speaker 1: So you know that it's an example of learning understanding
Speaker 1: the supply chain a little bit more about what would
Speaker 1: happen in terms of parts and pieces, and you know,
Speaker 1: ensuring that we could get as close as we could
Speaker 1: to some of these suppliers and manufacturers. And I'm not
Speaker 1: just talking about Boeing or Airbus, but you know, Saffron
Speaker 1: is a massive supplier, so so getting in close with
Speaker 1: them and understanding we might have a problem with the
Speaker 1: actuators and the business class seats and they're a little
Speaker 1: electric motor that moves the seats up and down. You know,
Speaker 1: I realize that my knowledge of that wasn't as deep
Speaker 1: as I would have wanted. And I can tell you
Speaker 1: as as some of these events, you know, you get
Speaker 1: little microcosms of them play out. You learn. So for example,
Speaker 1: you know, we're not going to be back in Vanuatu
Speaker 1: anytime soon. You know, we were flying into there, into
Speaker 1: New Maya. It's been you know, extended in terms of
Speaker 1: closing that area down. We'll keep the people on things
Speaker 1: because I know how hard it is to restart.
Speaker 2: Thinking of the headwinds you've you've talked about a few
Speaker 2: headwinds can be things you may have some control over
Speaker 2: or not. Says with the economy, with inflation, that was
Speaker 2: a big part of what happened with the result. Is
Speaker 2: there or are the headwinds that you do think you
Speaker 2: can work with that you can hedge four you can
Speaker 2: make some headway with if you like.
Speaker 1: Well, I think the answer to that is yes, and
Speaker 1: where we can I think we're doing a reasonable job
Speaker 1: of doing that. So you know, as we saw things
Speaker 1: tighten up a bit as early as sort of August
Speaker 1: of last year, so over a year ago. You know,
Speaker 1: we've gone through the FIFA World Cup, we'd had a
Speaker 1: pretty good July, and we could see coming into an
Speaker 1: election things we're going to get tight. We were hearing that,
Speaker 1: you know, should there be a change in government, spending
Speaker 1: would come down. So you know, you start preparing yourself
Speaker 1: for trimming your sales a bit, so you do that.
Speaker 1: There's always opportunities and productivity. You know, we've spent a
Speaker 1: lot of time over the last few years working on
Speaker 1: areas of the business where we know if we give
Speaker 1: people the right tools, then they can be more productive. Now,
Speaker 1: some of those are physical tools like ground service equipment,
Speaker 1: you know, getting the right pushback tugs or pallette loaders.
Speaker 1: Others can be things like replatforming the call center so
Speaker 1: that you've got a much better process there for handling calls.
Speaker 1: You know, we used to have about eight hundred people
Speaker 1: working in the call center. We've got that down to
Speaker 1: five hundred, and there is room to go even further,
Speaker 1: not just because of that tool, but because we also
Speaker 1: replatform the customer app. There's now considerably more things that
Speaker 1: customers can do self service. So we've reduced the call
Speaker 1: volume from sort of, you know, fifty thousand calls a
Speaker 1: week down to about twenty five thousand a week. So
Speaker 1: you're always looking at the things that you can control
Speaker 1: the ones you can't. You know, sometimes you just have
Speaker 1: to stomach those and move on.
Speaker 2: One of the ones that sounds like it's hard to
Speaker 2: control is getting new aircraft with Boeing, and you know,
Speaker 2: you've got the NEOs and the Dreamliners, and at one
Speaker 2: stage you had one billion worth of assets on the tarmac,
Speaker 2: not flying. You've talked at link about you know, what
Speaker 2: had happened and the like. Where is that going in future?
Speaker 2: I mean you've got to buy or put contracts in
Speaker 2: for airlines airliners years and years in advance. So is
Speaker 2: there much scope there to change suppliers or change your
Speaker 2: contracts or have some more certainty.
Speaker 1: Well, I think there's always areas that you can go
Speaker 1: in further. You know, on Sunday, I'll be out of
Speaker 1: the country and I'm heading up to Canada and meeting
Speaker 1: with the owner of d Havland who make the Q
Speaker 1: three hundred. And this particular person bought that airline off
Speaker 1: Bombardier probably about five years ago. You know, we have
Speaker 1: a fleet of Q three hundreds. They aren't making that
Speaker 1: plane anymore. So there's always an opportunity to sit down
Speaker 1: with these people and say, Okay, what is your strategy,
Speaker 1: where are we going to go? What are we going
Speaker 1: to do? You just can't sit there and wait. In
Speaker 1: about three weeks time, I will be in South Carolina
Speaker 1: in the Boeing plant where ideally we're going to get
Speaker 1: our first two of the eight seven eight sevens we've
Speaker 1: had on order and hopefully we'll be able to see
Speaker 1: those come into the country around about October November twenty
Speaker 1: twenty five. But you know, when I go there, I
Speaker 1: will meet with the chief executive of Boeing who's just
Speaker 1: started Kelli and their team and make sure that we're
Speaker 1: on the production line that's things are going to happen.
Speaker 1: By the way, we'll have engineers full time as that
Speaker 1: plane is being built up there, which is standard practice
Speaker 1: for us to ensure that all the specifications meet our specifications.
Speaker 1: So there's always things you can do, but it's hard,
Speaker 1: and you know, if you have a situation like we've
Speaker 1: had with Rolls Royce. We make a decision on a
Speaker 1: Trent engine back in two thousand and four, there were
Speaker 1: two choices. We could have gone with the Ge engine,
Speaker 1: we could have gone with the Trent. We made a
Speaker 1: decision to go with the Trent. We got the first
Speaker 1: of those on a plane back in about twenty fourteen,
Speaker 1: and really since about twenty seventeen, that's been a challenge. Now,
Speaker 1: these are expensive pieces of kit, so to suddenly say, well,
Speaker 1: I've got twenty eight of these engines, because I've got
Speaker 1: fourteen of these planes, I'll tell you what I'm going
Speaker 1: to rip them all off and go and put ge
Speaker 1: engines on them. That is too much to digest. So
Speaker 1: then we've got to sit down with Rolls and say
Speaker 1: how are we going to fix this problem? And it's global.
Speaker 1: You know, there are around about twenty three seven eight
Speaker 1: sevens parked on the ground around the world at the
Speaker 1: moment because there are not enough engines to fly them.
Speaker 1: We had four, but the good news is yesterday we're
Speaker 1: down to three. We were able to get a couple
Speaker 1: of engines, so we've got another one back fly. So
Speaker 1: you got to push, you've got to work at it
Speaker 1: all the time. But you also have to accept that
Speaker 1: in all likelihood the sort of airline ecosystem, in my view,
Speaker 1: is going to be a challenge in some areas like
Speaker 1: engines and spare parts for probably two plus more years.
Speaker 2: Doesn't make any difference that we are the small country
Speaker 2: island in the Pacific. I mean, if we're talking with
Speaker 2: the likes of Boeing and Rolls Royce, they're big players,
Speaker 2: and there's many others in the world who've got much
Speaker 2: more money in might than us.
Speaker 1: Does that factor there's always a risk it does. And
Speaker 1: you know, before I took this job. I was on
Speaker 1: the other end of the scale. I was with a
Speaker 1: business that employed in the US alone, I had one
Speaker 1: point four million staff, you know, five thousand stores. Who
Speaker 1: doesn't want to do the deal with Walmart? The reality, however,
Speaker 1: is that does have a component. But the other part
Speaker 1: of this is how do you bring something to the
Speaker 1: table with your supplier or partner that will excite them.
Speaker 1: And I'll give you an example of how we can
Speaker 1: play in this space. Two examples. Actually, you know, when
Speaker 1: the first of the seven eight sevens come down and
Speaker 1: we start flying them, ideally at the end of next year,
Speaker 1: they're going to have a product on them that no
Speaker 1: one else in the world has got. It's called sky
Speaker 1: nest oh yep. And what's that worth to Boeing? Because
Speaker 1: it's not just the delivery of you know, their seventh, seven, eight,
Speaker 1: seventh for the month, because that's sort of what they'll
Speaker 1: be trying to make seven, eight or nine of these
Speaker 1: planes a month. This is the first in the world.
Speaker 1: And you know, by the way, that fits in with
Speaker 1: our DNA because we were the first to have a
Speaker 1: skycouch on there. So what do you bring to the
Speaker 1: supply that they can't do? Another example. We hope that
Speaker 1: within about four weeks time, around the fourteenth fifteenth of October,
Speaker 1: one of our seven eight sevens will head up to
Speaker 1: Singapore and will begin to retrofit, and this plane should
Speaker 1: be back just before Christmas with a completely new setup
Speaker 1: for seats in business class and premium economy and economy,
Speaker 1: with new entertainment systems, with new galleys and bathrooms. So
Speaker 1: it's one of the existing fourteen seven eight sevens completely
Speaker 1: retrofit it. Here's the interesting thing. We are the first
Speaker 1: company anywhere to have done a retrofit of an old
Speaker 1: plane to that extent before a new one has been built.
Speaker 1: Because normally what you would do is that you would say,
Speaker 1: I've got some new product that I want to put
Speaker 1: on the plane, new seats or new galleys or whatever,
Speaker 1: the next one that's going through the big production line.
Speaker 1: I'm going to get it done there.
Speaker 2: New plane.
Speaker 1: So why did this happen. It happened because we sat
Speaker 1: down with Boeing about three years ago, not long after
Speaker 1: the country had reopened, and we spoke about when we
Speaker 1: were likely to see planes new ones and what we
Speaker 1: could do about retrofits. So they explained to us as
Speaker 1: you would expect. Well, we'll get the new plane off
Speaker 1: and then we'll start thinking about retrofits. And we said, yeah,
Speaker 1: but if you're going to be delayed, this could be
Speaker 1: putting us behind the eight ball. And the other thing
Speaker 1: complication they said to me is we also got a problem.
Speaker 1: We had a thousand engineers between the Ukraine and Russia
Speaker 1: and we've lost all those people because we had to
Speaker 1: go fight in the war. So we don't have a
Speaker 1: whole bunch of technical capability to be able to take
Speaker 1: all the drawings and all the things that have to
Speaker 1: be done so that you can complete a retrofit. So
Speaker 1: go away, go talk to someone else. And we sat
Speaker 1: down with them and said, actually, no, we're going to
Speaker 1: help you design a new process for this. We're going
Speaker 1: to work out how you're going to provide some of
Speaker 1: that intellectual property to a middleman and integrator, and together
Speaker 1: the three of us, between the integrator, yourself and ourselves,
Speaker 1: we're going to work out how to do this before
Speaker 1: we even build a new plane. Now we're on the
Speaker 1: cusp of doing that, but what's that worth deboeing? Well,
Speaker 1: as I said them, if you learn how to do
Speaker 1: this new process with a smaller line down the bottom
Speaker 1: of the world. You've now solved a problem for much
Speaker 1: larger airlines.
Speaker 2: And they've obviously agreed with that. Is it an experiment
Speaker 2: for them.
Speaker 1: You think a little bit. I'm sure, but I can
Speaker 1: tell you they've been pretty happy with how it's going.
Speaker 1: But boy, it's been hard.
Speaker 2: Yeah.
Speaker 1: So you know, every two weeks we're on a VC
Speaker 1: with them and there are probably seven or eight people
Speaker 1: who pretty much for the last six months have had
Speaker 1: to live overseas, getting into Japan to meet with JAMCO,
Speaker 1: or getting into France to meet with Saffran, or in
Speaker 1: Wales where the seats are being built, and they're having
Speaker 1: to can we get this done? And can you talk
Speaker 1: to this person and do that? But heck it, in
Speaker 1: a situation like ours, if you don't develop some agility,
Speaker 1: you just can't get stuff done.
Speaker 2: One of the areas that in New Zealand has was
Speaker 2: always sought to be a trailblaze and was obviously sustainable aviation,
Speaker 2: fuel flying and thinking about target at twenty thirty and
Speaker 2: the like. That's obviously changed in recent times. I mean,
Speaker 2: where is that at in terms of how we could
Speaker 2: come back and be a leader and actually changing the
Speaker 2: dial for an industry that has seen to be polluting
Speaker 2: the atmosphere and warming the planet.
Speaker 1: Well, the first thing I'd say is, actually, I'm not disappointed.
Speaker 1: I'm very proud of the team. Now, Now that may
Speaker 1: seem a bit strange, but you know, the most important
Speaker 1: thing in any business's culture and the ability to you know,
Speaker 1: part of that is the ability to be able to
Speaker 1: have very honest and truthful and unvarnished conversations. So let's
Speaker 1: wind the clock back two and a half years ago
Speaker 1: and we decide that we're going to put in a
Speaker 1: science based target and I think we were the second
Speaker 1: airline in the world to do it. And we sat
Speaker 1: down and we said, okay, what do we think we
Speaker 1: need to do to achieve this? And well, you know,
Speaker 1: this is where the fleet's going to be, and this
Speaker 1: is how many sustainable aviation fuel plants are going to
Speaker 1: be built. These are the routes that we're going to fly,
Speaker 1: This is how we're going to get more productive with
Speaker 1: the flying that we're doing. This is what we're going
Speaker 1: to do with electrifying ground service equipment. You can see
Speaker 1: you build this thing up two and a half years
Speaker 1: ago and you say, based on these assumptions, this is
Speaker 1: where we think will be by twenty thirty. Well, a
Speaker 1: couple of things have changed over those two and a
Speaker 1: half years, you know. One of them is we are
Speaker 1: almost certainly going to have to keep our triple sevens
Speaker 1: a bit longer. Why because Boeing, you know, we placed
Speaker 1: an order. We thought we were going to get that
Speaker 1: order in twenty twenty two. We delayed it for one year,
Speaker 1: so it was initially twenty twenty one, and we said
Speaker 1: to Boeing, look, COVID all the other stuff, delay those
Speaker 1: till twenty twenty two. And they said, that's fine. I've
Speaker 1: just shared with you. The earliest we'll see them is
Speaker 1: the end of twenty twenty five. So the fleet that
Speaker 1: we thought we were going to fly, which was more
Speaker 1: fuel efficient than the Triple sevens, we just can't get
Speaker 1: those planes. So there's no point hiding behind that. That
Speaker 1: is a reality. You know, at some point, if sustainable
Speaker 1: aviation fuel is the solution, and at this stage that
Speaker 1: is the solution. Yeah, right, The current thirty plants or
Speaker 1: so that are around the world need to increase to
Speaker 1: about five thousand. So think about that, thirty plants to
Speaker 1: about five thousand. So as we look at that and
Speaker 1: we say, well, okay, we're we're working really hard at
Speaker 1: the moment. We want to get two percent of our
Speaker 1: fuel being sustainable aviation fuel this year, two percent to
Speaker 1: hit the target in twenty thirty, you've got to believe
Speaker 1: that's going to get to seventeen percent. There's a lot
Speaker 1: of extra plants that have got to get built between
Speaker 1: now and the end of the year. What's going to
Speaker 1: happen in terms of regulation on this, Is it going
Speaker 1: to get mandated or not. So you know what we've
Speaker 1: done is we've said, hey, let's just take a look
Speaker 1: at this, because you've got to put your hand on
Speaker 1: your heart and you've got to say I'm going to
Speaker 1: hit that goal. And if you have some situations that
Speaker 1: have changed, which we have as I've just shared with you,
Speaker 1: the appropriate thing to do is to remove that and
Speaker 1: then to reassess there is no change in the commitment
Speaker 1: to how we feel about sustainable aviation fuel, to reducing carbon,
Speaker 1: to all the other activity. We've got an electric aircraft
Speaker 1: which we'll be using as a demonstrator down here, to
Speaker 1: the activity that happens around our business, to removing cups,
Speaker 1: to electrifying equipment. None of that's changed. And that's why
Speaker 1: I began by saying to you, I'm proud of what
Speaker 1: we did because I am. The wrong thing to do
Speaker 1: would have been to delay making that decision and then
Speaker 1: be put in a corner later on. I think we've
Speaker 1: come out and done the right thing and said, hey,
Speaker 1: we're taking that away. We're going to go back and
Speaker 1: review it. Give us a few months, and we'll be
Speaker 1: back with what we think is a better number than
Speaker 1: we had than the one we had previously.
Speaker 2: As a possibility though, that things could change again, and
Speaker 2: it may be that you maybe don't make that target,
Speaker 2: but twenty fifty does seem a long way out.
Speaker 1: I'll guarantee you things will change again. I don't have
Speaker 1: any doubt they will. I also have no doubt that
Speaker 1: some of the assumptions we make will be wrong. So
Speaker 1: you know this is a challenge. So why does twenty
Speaker 1: fifty sit out there, Well, you know some of us
Speaker 1: won't be around by twenty fifty, so it's easier to
Speaker 1: make some of those assumptions. And that is the reality
Speaker 1: of these things. But you know the commitment, you have
Speaker 1: no doubt. Your listeners should have no doubt that sustainability
Speaker 1: is a keyp link. I think we have some of
Speaker 1: the very best people that I have seen in any airline,
Speaker 1: in fact in any industry working for us today in
Speaker 1: New Zealand on this and we should have confidence that
Speaker 1: the solutions that we come up with are enduring, the
Speaker 1: right solutions are going to engage the right group of
Speaker 1: stakeholders in the appropriate way.
Speaker 2: Greg, the New Zealand economy has been someone in the
Speaker 2: dull drums. It's common knowledge, but there are some green shoots.
Speaker 2: Are you seeing any of that? In your commentary when
Speaker 2: the earnings results were released, talked about some corporates, businesses
Speaker 2: flying less and that obviously it had an impact. Are
Speaker 2: you now or you seeing perhaps in quarters ahead that
Speaker 2: that will change.
Speaker 1: Look my sense at the moment, and this is a
Speaker 1: judgment call, is that I think worried about the bottom
Speaker 1: at this point and have been there for a few weeks,
Speaker 1: not for months. You know, we see governments being down
Speaker 1: about twenty eight We see small medium enterprises and corporates
Speaker 1: down about ten to twelve percent. Leisure is holding up,
Speaker 1: but you have to stimulate it so domestically it is tough.
Speaker 1: But I think we're at the bottom, and usually what
Speaker 1: happens is that you'll sit there for a period of
Speaker 1: time and then recover.
Speaker 2: Now you mean Christmas.
Speaker 1: Your guess is as good as mine in terms of
Speaker 1: when that will be and also what the slope of
Speaker 1: that is going to be. Like, I'm not expecting it
Speaker 1: to happen immediately, but maybe we get through Christmas, maybe
Speaker 1: we get into next year, and people then start to
Speaker 1: ease their way out of it. Now, I will say
Speaker 1: that the decision to increase the IVL, the decision to
Speaker 1: increase visas, are the costs that are coming through. You know,
Speaker 1: the CIA are talking about costs. That doesn't help the
Speaker 1: situation because about twenty percent year domestic business is fueled
Speaker 1: by people flying into Auckland and jumping on a plane
Speaker 1: to go to Queenstown or go to the vineyards in
Speaker 1: Blenham or wherever. So you know, the headwinds are there
Speaker 1: for a bit. But I am encouraged that it's bottomed
Speaker 1: and in time, because it always does, people are going
Speaker 1: to get out there and start spending.
Speaker 2: Just looking now at some of the roots, I know,
Speaker 2: India was one that you've mentioned and commentary in the
Speaker 2: last few weeks and we have actually had some investor
Speaker 2: questions asking when that might be a possibility. There's also
Speaker 2: the US that's quite challenging, quite competitive. Are there other
Speaker 2: things you can tell us about the roots that you're
Speaker 2: looking at flying and and why would it be those ones?
Speaker 1: Yeah, look, not a lot at this stage. And the
Speaker 1: reason for that is that we just want to get
Speaker 1: a little bit much, a little bit more sure when
Speaker 1: aircraft are going to be available and what numbers. But
Speaker 1: you know, look, it's fair to say a couple of things.
Speaker 1: You know. One is you do want to grow your business,
Speaker 1: because in a business like ours, is very hard unless
Speaker 1: you've got some growth around. I'm doing some extra routes,
Speaker 1: I've got some more seats on and et cetera. So
Speaker 1: that's always top of mind. And you know, we sat
Speaker 1: down and had a look at the five year plan,
Speaker 1: you know, twenty four hours ago, and I like what
Speaker 1: the team are pulling together there in terms of the
Speaker 1: sort of growth that I'm seeing. I would say, also,
Speaker 1: you want to be a little bit careful about trying
Speaker 1: to expand too quickly because you're buying really expensive assets.
Speaker 1: You need these planes to be operational A lot of
Speaker 1: hours of the day in order to make money. But
Speaker 1: there are always a few opportunities that you want to
Speaker 1: look at. And you know, it makes common sense for
Speaker 1: us to consider India at a point in time. Not
Speaker 1: sure when at the stage, but you know, we get
Speaker 1: a lot of traffic heading up to Singapore. A reasonable
Speaker 1: amount of that traffic goes on to Europe, but a
Speaker 1: surprising amount peels off and heads to many locations within India.
Speaker 1: So that's something that we're going to continue to look at.
Speaker 1: And then the other one that continues to be on
Speaker 1: our mind from two aspects. You know, one of them
Speaker 1: is getting back into Europe and you know would be
Speaker 1: the most asked about route that I have. So when
Speaker 1: people see me and want to engage with me, and
Speaker 1: it's not because they lost their bag, it's usually about, hey,
Speaker 1: what can we do about getting back to London, for example,
Speaker 1: So it's a very asked about route. We stopped flying
Speaker 1: there I think twenty nineteen, so you know, it's not
Speaker 1: as easy as just saying well, let's just turn it
Speaker 1: on and come once again. It's planes, it's all that stuff,
Speaker 1: So we need to think carefully about that and when.
Speaker 1: And then the other thing is a competitive nature of that.
Speaker 1: You know, you just don't run your airline in isolation.
Speaker 1: So you know, whether it's sovereign carriers coming in from
Speaker 1: the Middle East or carriers from Australia, we need to
Speaker 1: be very careful that we protect our market share, so
Speaker 1: you know, we think about these things carefully.
Speaker 2: Greg, you haven't given any guidance. You've said that things
Speaker 2: are too uncertain, and the market for the most part
Speaker 2: has accepted that. For retail investors, though, what would you
Speaker 2: say to them when they're thinking about what they should
Speaker 2: be doing with your portfolio in New Zealand? Might be
Speaker 2: an emotional by it might not be though too. I mean,
Speaker 2: how would they prudently cees what's going on without guidance?
Speaker 1: Yeah, I think you've got to listen to these sort
Speaker 1: of podcasts and hear it from from people like myself
Speaker 1: and others, and then test the experience when you fly.
Speaker 1: So so I'll give you some examples. You know, the
Speaker 1: headwinds that we're spoken about around fleet, around the domestic economy,
Speaker 1: around you know, the added cost and the complexity particularly
Speaker 1: around fleet that get added into the business. You've got
Speaker 1: to put some more people in the call center, You've
Speaker 1: got to deal with more disruption, you've got to change
Speaker 1: twice as many engines, which is what we're doing at
Speaker 1: the moment. And then you know the competition that's coming
Speaker 1: out of the US, which is about fifty two percent
Speaker 1: more seats than what we've traditionally seen, so so not
Speaker 1: five percent more seats, fifty So you have to say
Speaker 1: to yourself, Okay, so I understand those are some of
Speaker 1: the fact is that you're dealing with an Air New Zealand.
Speaker 1: You know, you've got fleet, you got domestic, and you've
Speaker 1: got some increased competition out of the US. Okay, I
Speaker 1: understand that. Now what am I seeing and feeling about
Speaker 1: Air New Zealand as a business? You know, what are
Speaker 1: the things that would want to encourage me? What's it
Speaker 1: like when I ring the call center? Am I getting
Speaker 1: through pretty quickly? Are they able to solve problems with speed?
Speaker 1: Am I able to solve more problems because I now
Speaker 1: have a new app on my phone? How quickly and
Speaker 1: efficiently are things working? So you make those calls and
Speaker 1: you say to yourself, the headwinds are the headwinds realistically?
Speaker 1: How long are they going to stay as those start
Speaker 1: to dissipate, which they will all of them at a
Speaker 1: point in time. Is this a business which is well
Speaker 1: positioned to grow? And I would say to you the
Speaker 1: answer is yes. We're building an airline here that is
Speaker 1: going to be built to last, so I have complete
Speaker 1: confidence in it. And I don't say that in a
Speaker 1: misguided way. For sure, I'd like the profit to be
Speaker 1: a bit better, but I can explain why it is,
Speaker 1: and we're not about just putting the fares up to
Speaker 1: cover some of those issues. We've tried to be very
Speaker 1: balanced about that. We're making good decisions on fleet, We're
Speaker 1: working hard to continue to improve the product. So I've
Speaker 1: got a lot of confidence in New Zealand.
Speaker 2: Thanks everyone for tuning in. You can watch Shared Lunch
Speaker 2: on YouTube or follow the podcast wherever you get your podcasts.
Speaker 2: Leave us a rating and tell us what you'd like
Speaker 2: to hear next. Mark.
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