Air New Zealand's Numbers Do Not Add Up

Today frequent flyers received another email from the CEO of Air New Zealand Greg Foran.

It was all prima facie rather blunt, but still full of spin.  The highlights:

Before Covid-19, we had annual revenue of around $5.8 billion and made a profit of $374m in the last financial year. We also had around a billion dollars in the bank in case an unexpected event hit our business.
The global reduction in air travel has hit Air New Zealand hard and we are earning less than $500 million revenue annually based on the current booking patterns. This means we are dealing with a significant reduction of over $5 billion in revenue per year.
$5.8b less $5b = $800m in revenue expected per year?  At best?
Or less than $500m?
With $1b in reserves he has enough to carry the company for 2 months at annualised revenues of $5.8b, with another $900m added he has enough to carry it 2 more months without changing a thing and dumping any staff?
Air New Zealand currently employs around 12,500 people around the world at a monthly labour cost of $110m (annual $1.32b). Given our operations will be much smaller for some time, we will need fewer staff. We expect in a year’s time, we will be at least 30 percent smaller than we are today.
So okay Air NZ are expecting a drop in revenue of some 87% yet they are only going to reduce their staff  cost by just 30%? Their annual wage bill is some $1.32b.  Yet they wish to keep 70% cost of the staff? Ergh what on earth for?

Where are these staff going to go? I mean they cannot go work at other airlines?  There are no jobs there either.

And here is the political kicker:

The reality is that given we are expecting to be at least 30% smaller than we are today we will need to reduce the size of the workforce by up to 3500 roles.
The extent of this reduction is based on conservative assumptions and we may have to change these as the situation evolves, especially if the Level 4 Alert goes beyond the planned 28 days or border restrictions are in place for a prolonged period.

Foran has given himself and Air NZ the out of all outs.  3,500 roles gone but the level 4 alert has to only go 28 days and the border restrictions have to come off soon.

Neither is going to happen.

I am conscious that a smaller Air New Zealand also comes with a significant impact on our suppliers, some of whom may have to reduce the size of their workforces as well.

And yes the flow on effects are much greater than Air NZ and the tourism industry.  Catering, travel agents, insurance, Airports, all the services attached.

Once again Greg Foran is just like Jacinda Ardern not telling the whole truth about what needs to happen here.  The Aviation Fuel market has fallen away so that OPEX is falling as well. How long are they planning on not flying internationally for?

The Coronavirus Coalition wants to stretch the agony out as long as possible, preferably past the election.  

In this case that the $900m theyve just doled out to Air NZ will not be enough without their labour force reducing to match the 87% drop in revenue expected.  

So we ask was any deal on employee numbers done in exchange for the $900m?  And how much of that $900m is going to pay wages for people who will very soon not have jobs at all in addition to the 30% cuts mooted.

It is taxpayer money and the taxpayer should have the transparency to see just where the cash poured into the bottomless funnel is actually going.  Because if it is to hide or defer true unemployment statistics it is but a fraud.

Many New Zealanders soon having to accept much lower dole payments should have the right to see how much of their taxpayer dollars is going to keep those 70% of Air New Zealand workers in higher paid jobs that by mathematics, should not exist.


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