1 00:00:00,040 --> 00:00:02,000 Speaker 1: More analysis of their New Zealand I'm Afraid to tell 2 00:00:02,000 --> 00:00:04,360 Speaker 1: you and where it's heading financially. After a miserable result 3 00:00:04,440 --> 00:00:07,040 Speaker 1: last week, Morning Star is now forecasting one hundred and 4 00:00:07,080 --> 00:00:09,400 Speaker 1: twenty five million pretexts lost for the year that follows 5 00:00:09,440 --> 00:00:11,799 Speaker 1: the fifty nine of read last week. Andy Bowley is 6 00:00:12,520 --> 00:00:15,120 Speaker 1: for South Bar, head of researchers with us Andy Morning. 7 00:00:15,560 --> 00:00:16,279 Speaker 2: Good Morning Mine. 8 00:00:16,320 --> 00:00:19,400 Speaker 1: We all broadly agreed on the numbers it will be because, 9 00:00:19,440 --> 00:00:21,000 Speaker 1: I mean, the fifty nine last week was a bit 10 00:00:21,079 --> 00:00:23,520 Speaker 1: higher than we thought, wasn't it. 11 00:00:23,520 --> 00:00:26,720 Speaker 2: It was a tad higher than we thought. In the 12 00:00:26,720 --> 00:00:29,920 Speaker 2: context of what the go forward looks like. Yeah, I 13 00:00:29,920 --> 00:00:32,839 Speaker 2: don't think there's too much disagreement in light of what 14 00:00:32,880 --> 00:00:36,279 Speaker 2: the company suggested the second half would look like. So 15 00:00:36,600 --> 00:00:40,400 Speaker 2: it's going to be similar or worse that. The worse, 16 00:00:40,800 --> 00:00:43,599 Speaker 2: I guess is the concerning aspects is how bad could 17 00:00:43,640 --> 00:00:46,680 Speaker 2: it get? And there's quite a quiet range now in 18 00:00:46,760 --> 00:00:50,400 Speaker 2: terms of market expectations of what the full year and 19 00:00:50,440 --> 00:00:51,440 Speaker 2: the second half will bring. 20 00:00:51,600 --> 00:00:53,640 Speaker 1: How much of it's specific and we already know and 21 00:00:53,680 --> 00:00:55,880 Speaker 1: it's baked in versus how much of it's unfolding in 22 00:00:55,920 --> 00:00:58,280 Speaker 1: the Middle East at the moment, and affects all their aviation. 23 00:00:59,600 --> 00:01:02,120 Speaker 2: I think there's a fair bit that's baked in in 24 00:01:02,200 --> 00:01:04,760 Speaker 2: terms of the under line challenges that the business has 25 00:01:04,800 --> 00:01:08,000 Speaker 2: before you start to think about fuel prices and the 26 00:01:08,040 --> 00:01:11,560 Speaker 2: consequences potentially on demand in terms of what's going on 27 00:01:11,600 --> 00:01:14,839 Speaker 2: in the Middle East. Fuel prices is something that they 28 00:01:14,880 --> 00:01:19,600 Speaker 2: manage on an ongoing basis through their hedging profile. Albeit 29 00:01:19,640 --> 00:01:22,479 Speaker 2: there's a part of the ore price dynamic that they 30 00:01:22,520 --> 00:01:28,040 Speaker 2: don't hedge particularly fully. So I don't want to necessarily 31 00:01:28,080 --> 00:01:30,160 Speaker 2: get into the detail in terms of, you know, the 32 00:01:30,200 --> 00:01:32,840 Speaker 2: makeup of the jet fuel price, but they do have 33 00:01:33,000 --> 00:01:36,280 Speaker 2: exposure to what's going on from fuel cost perspective at 34 00:01:36,280 --> 00:01:36,640 Speaker 2: the moment. 35 00:01:36,680 --> 00:01:38,800 Speaker 1: Can you explain to me because my trouble is, I mean, 36 00:01:38,800 --> 00:01:40,600 Speaker 1: we had Nicol on the program the other day and 37 00:01:40,640 --> 00:01:42,200 Speaker 1: he gave a whole lot of excuses as to why 38 00:01:42,280 --> 00:01:43,640 Speaker 1: things aren't the way they are. One of them was 39 00:01:43,720 --> 00:01:45,840 Speaker 1: landing charges. But then I talked to Luxon about it. 40 00:01:45,880 --> 00:01:48,200 Speaker 1: Who knows about airlians He said, landing charges are well 41 00:01:48,200 --> 00:01:50,000 Speaker 1: down the list. They got a bunch of other problems. 42 00:01:50,480 --> 00:01:54,400 Speaker 1: Are they a troubled company in an industry that's booming. 43 00:01:56,000 --> 00:01:59,040 Speaker 2: I think they've got a number of problems. Mike, Absolutely, 44 00:01:59,440 --> 00:02:04,080 Speaker 2: So the landing charges is part of the issue, but 45 00:02:04,120 --> 00:02:07,840 Speaker 2: it's one of various issues that you can talk to 46 00:02:07,960 --> 00:02:09,799 Speaker 2: on the cost side of things. You know, if you're 47 00:02:09,800 --> 00:02:13,040 Speaker 2: thinking about the aviation system costs that they talked about 48 00:02:13,120 --> 00:02:15,919 Speaker 2: last week, landing charges is a piece that the civil 49 00:02:15,960 --> 00:02:21,040 Speaker 2: aviation fees or another you can talk about aviation security. 50 00:02:21,120 --> 00:02:24,160 Speaker 2: All of those have gone up quite materially in recent years, 51 00:02:24,400 --> 00:02:28,440 Speaker 2: but they're not the only cost increases that the company 52 00:02:28,520 --> 00:02:31,440 Speaker 2: is incurring. If you think about it, it's two big 53 00:02:31,480 --> 00:02:34,600 Speaker 2: cost buckets. One's fuel, which we've kind of alluded to already. 54 00:02:34,680 --> 00:02:39,320 Speaker 2: The other's labor. They've got a big labor force, heavily unionized, 55 00:02:39,919 --> 00:02:43,440 Speaker 2: and that labor force is at a pretty similar level 56 00:02:43,480 --> 00:02:46,639 Speaker 2: to what it was pre COVID, but they're flying ten 57 00:02:46,639 --> 00:02:47,919 Speaker 2: to fifteen percent less at the moment. 58 00:02:48,040 --> 00:02:53,200 Speaker 1: Yeah, there is cost. Having read the report, it sort 59 00:02:53,240 --> 00:02:55,880 Speaker 1: of comes right, it will come right. Does it come 60 00:02:55,960 --> 00:02:59,000 Speaker 1: right enough? Or is there something structural about the company 61 00:02:59,040 --> 00:02:59,760 Speaker 1: that needs fixing. 62 00:03:01,520 --> 00:03:04,080 Speaker 2: I think that the structural piece is something that the 63 00:03:04,120 --> 00:03:08,400 Speaker 2: companies alluded to themselves in terms of the strategy reset 64 00:03:08,520 --> 00:03:12,360 Speaker 2: they're going to go through now to try and possibly 65 00:03:12,400 --> 00:03:17,519 Speaker 2: reposition the business to better compete in the kind of 66 00:03:17,600 --> 00:03:21,839 Speaker 2: the post COVID and higher cost environment that they're currently in. 67 00:03:22,200 --> 00:03:26,280 Speaker 2: So you know, there's certainly some aspects that they will 68 00:03:26,360 --> 00:03:32,320 Speaker 2: target to improve their efficiencies, improve their financial performance. 69 00:03:32,600 --> 00:03:34,680 Speaker 1: We can only wish them well appreciated, Andy Andy Bully, 70 00:03:34,680 --> 00:03:35,960 Speaker 1: who's with the Forsyth Bar. 71 00:03:36,680 --> 00:03:39,560 Speaker 2: For more from the Mic Asking Breakfast, listen live to 72 00:03:39,720 --> 00:03:42,760 Speaker 2: news talks. It'd be from six am weekdays, or follow 73 00:03:42,800 --> 00:03:44,320 Speaker 2: the podcast on iHeartRadio.