How Air New Zealand’s boss learnt to ‘panic slowly’

Loading

Air New Zealand did not meet its performance goals for the year, meaning the short-term incentive threshold was not reached, and no executives received their bonuses.

Foran ended up taking home about 40 per cent of his target remuneration for the year, but the very disclosure of the future share option was enough to frustrate employees and passengers.

It’s likely the airline will meet its performance targets this year, meaning Foran will be able to cash out the 5.8 million share rights.

Foran said the staff attrition rate at the airline had improved from the dire outlook for the carrier in 2020.

“Staff engagement is critical. We feel we’ve got the staff not only in numbers, but we’ve got them engaged with the purpose of the business and what we stand for.”

Airbus and Boeing have made their manufacturing struggles no secret. It’s likely carriers will have to contend with supply chain delays for at least another 18 months. Air New Zealand is expecting the first two of its order for eight Boeing-787s to arrive at the end of next year and awaits an order of four A320/A321 neos.

Representatives from the two manufacturers met the world’s airlines in Istanbul and likely batted off more than one request for an update on the status of their aircraft orders. But Foran said he was not panicking about the future of his fleet just yet.

“I’m not screaming and jumping up and down about it yet. Let’s wait and see,” he said.

Loading

Before helming Air New Zealand, Foran led $300 billion retailer Walmart in the US.

When asked whether he agreed with Australia’s competition watchdog – which said last week Australia’s airlines should be called out for taking up unneeded slots at Sydney Airport – Foran said Air New Zealand prioritised consistency.

“I’m not an airline person. But I am a believer in simplicity. I’d rather design a schedule that I know we can fly. I don’t like under- or over-servicing; we want the balance and it ultimately boosts customer experience and lowers our costs,” he said.

Air New Zealand launched the first direct service from the Auckland to New York at the end of last year. Next week, Qantas will follow suit.

“I enjoy a bit of competition,” Foran said.

“There’s significant cost pressure coming at us. Labour’s gone up, passenger levies have gone up, catering has gone up, and levies have gone up.

“We’ve been able to pass a fair amount of that back because our capacity has been restrained. I think this is becoming a harder issue for us to deal with. We need to shift from enjoying the recovery to sustaining this performance.”

Air New Zealand is at about 91 per cent of its pre-COVID-19 capacity. Foran said it was unlikely the airline would fully recover for at least a couple of years because it retired its wide-body fleet during the pandemic and it would be some time before the carrier would have replenished its fleet.

“It’s possibly as good as it gets at this point. Demand exceeds supply, fares are high. What’s going to happen as international capacity comes back in and stagflation plays itself out. It’ll be interesting.”

This reporter travelled to Turkey as a guest of IATA.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.