Air New Zealand ‘won’t step back’ from fight with Qantas on Auckland-New York, says CEO

The airline’s boss has likened the airline to the All Blacks as it competes fiercely with Qantas on New York routes.

Air New Zealand boss Greg Foran has likened the airline to the All Blacks in its contest with Qantas on Auckland-New York, saying “we won’t be stepping back”.

Qantas recently announced it would increase frequency on the route from October 10, to six times a week from four times currently.

Air New Zealand has operated three flights a week on the 16-hour route since 2022 and faced challenges to up frequency due to fleet problems.

Delivering the carrier’s annual results in Auckland, Mr Foran said he would like to do some more flying, but that was difficult when about $1bn worth of aircraft was grounded.

Three Boeing 787s, and six Airbus neo aircraft were affected by accelerated maintenance requirements for their engines, keeping them out of service at times.

“It’s frustrating when you’ve got some of your best aircraft you just can’t fly,” said Mr Foran.

He said the difficulties had reduced the amount of flying Air New Zealand was capable of, but he was determined the issues would not affect their market position.

“Competition’s good and we welcome it, and we won’t be stepping back — a bit like the All Blacks haven’t lost in 50 games at Eden Park, we won’t be either,” said Mr Foran.

His comments came after delivering a significant drop in net profit from NZ$412m (AU$379m) for 2023, to NZ$146m (AU$134m) for the 2024 financial year.

Fleet challenges and a slowdown in demand for domestic travel were blamed for the slump.

It was estimated that had the airline’s full fleet been available throughout the period rather than sidelined by engine issues, earnings before tax would have been NZ$100m, ($92m) higher, than the NZ$222m (AU$204m) recorded.

Air New Zealand CEO Greg Foran. Picture: Hannah Peters/Getty Images

Mr Foran acknowledged cost of living issues were hitting New Zealanders, but he pointed out domestic airfares and those on overseas routes, had actually fallen in the last year.

“I have a lot of empathy for costs everywhere, the costs for households, but what we’re seeing in terms of our data is the average cost to fly domestically in July this year was $184 compared to $212 a year ago,” he said.

“During that period costs for non-labour have gone up 7 per cent, and for labour that’s gone up 6 per cent, and that’s one of the reasons for the pressure on profit.”

He said about 400 people had been let go from some parts of the business in recent months as a cost-saving measure, but the frontline workforce had been boosted.

The cuts amounted to about 2 per cent of the workforce of 11,700 full-time equivalents.

Despite the fall from last year’s record profit, a dividend of 1.5 cents a share was announced.

The results were ultimately a tale of two halves, with the first half seeing NZ$185m (AU$170m) in earnings before tax and a net profit of NZ$129m ($119m) compared with the second half’s NZ$37m (AU$34m) in earnings and NZ$17m (AU$15.6m) profit.

Chair Dame Therese Walsh said it had been a “difficult year managing both macroeconomic and operational challenges” and thanked employees.

“We know these challenges will pass, some faster than others, but they have had a significant impact on our financial performance this year,” said Dame Therese.

“We believe in the strength of our plan and our team and are excited about the opportunities ahead as we move out of this current cycle.”

Mr Foran acknowledged employees as well as customers for “their understanding and loyalty in the face of unavoidable scheduling changes while travelling with us this year”.

“We are very proud of what our team managed to achieve, but we know it has been far from perfect for impacted customers,” he said.

Although no guidance was offered due to the “ongoing uncertainty”, Mr Foran said Air New Zealand was expecting a challenging year ahead.

“As we continue to navigate this difficult environment, we remain focused on the big picture, controlling what we can, relentlessly focusing on our customers and our people and investing for the future,” he said.