Latest / Best of Business / Nikhil Ravishankar: Air New Zealand CEO on the airline expecting a $390 million loss amid ongoing fuel crisis

Transcript

Nikhil Ravishankar: Air New Zealand CEO on the airline expecting a $390 million loss amid ongoing fuel crisis · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks. It'd be
• 0:12
  Speaker 1: follow this and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: Now, of course, we have more bad news for Air
• 0:18
  Speaker 2: New Zealand. The airline is now forecasting a full year
• 0:21
  Speaker 2: loss of close to four hundred million dollars. This is
• 0:23
  Speaker 2: obviously driven by the war in Iran and related fuel costs.
• 0:26
  Speaker 2: Nicol Revshank is Air New Zealand CEO and with US
• 0:29
  Speaker 2: high Nickel. Hi, thanks for coming in. I'm well, thank you.
• 0:32
  Speaker 2: It can't be much fun at the moment, is it.
• 0:33
  Speaker 3: It's good fun. The fundamentals of the airline is in
• 0:36
  Speaker 3: really good shape, yeah, quite genuinely. You know, we've been
• 0:39
  Speaker 3: dealing with these engine issues for the last four years
• 0:42
  Speaker 3: and as of today we only have one aircraft grounded.
• 0:45
  Speaker 3: We are twenty percent of our fleet parked up, so
• 0:48
  Speaker 3: the engines are starting to come right. We have two
• 0:51
  Speaker 3: new aircraft on its way, We're well through the retrofit
• 0:55
  Speaker 3: program on the wide bodies, and we've got a strategy
• 0:59
  Speaker 3: that we all have stacked hands and we're keen to
• 1:02
  Speaker 3: execute it now. But you know, the slight complication is
• 1:07
  Speaker 3: the fact that there's a war going on and that
• 1:10
  Speaker 3: impacts us so very directly, and we have to deal
• 1:13
  Speaker 3: with what's in front of us.
• 1:14
  Speaker 2: Yeah, but I mean to be fair, this is not
• 1:15
  Speaker 2: the only thing you're dealing with, right, You're dealing with
• 1:17
  Speaker 2: a compounding lot of stuff, including a recession in New
• 1:19
  Speaker 2: Zealand that we've just come through. Are you going to
• 1:21
  Speaker 2: need a bailout of this carries on no enough cash reserves?
• 1:25
  Speaker 3: Yeah, we've You know, COVID TOTA is a great lesson
• 1:28
  Speaker 3: in terms of the war chest. You know, we knew
• 1:31
  Speaker 3: what we were facing into as we came out of
• 1:33
  Speaker 3: that that crisis was a more volatile and more uncertain world.
• 1:39
  Speaker 3: And so we've spent the last six years really building
• 1:42
  Speaker 3: a bigger war chest for the airline, a much bigger
• 1:46
  Speaker 3: shock absorber, if you will. And that's meant that we
• 1:49
  Speaker 3: have a long we have a duration of time where
• 1:53
  Speaker 3: we can cope with this crisis.
• 1:54
  Speaker 2: Okay, are you going to have to trim flights further?
• 1:58
  Speaker 3: We will have to. We're making sure that we're giving
• 2:02
  Speaker 3: everyone certainty around what that's going to look like. Yeah,
• 2:05
  Speaker 3: So you won't see us doing any more trimming or
• 2:09
  Speaker 3: consolidating of flights out to the end of July school holidays.
• 2:13
  Speaker 3: We all want that certainty. And then by the end
• 2:16
  Speaker 3: of this month and early into next we will announce
• 2:20
  Speaker 3: what August to October is going.
• 2:23
  Speaker 2: To look like.
• 2:24
  Speaker 3: So well, you know, we either sort of roll over
• 2:27
  Speaker 3: the changes that we've made into July, or we might
• 2:31
  Speaker 3: have to go a bit further, depending on what fuel
• 2:33
  Speaker 3: is doing at any point in time.
• 2:34
  Speaker 2: Logically, some of what you're doing may become permanent.
• 2:37
  Speaker 3: Right, not necessarily, no, I mean, one thing that's worth
• 2:42
  Speaker 3: keeping in mind is the way this crisis has impacted us.
• 2:49
  Speaker 3: You know. One of the phenomenon in airlines, which when
• 2:52
  Speaker 3: I say it will sound obvious, but is an important factor,
• 2:54
  Speaker 3: is we sell tickets up to a year ahead of
• 2:58
  Speaker 3: when you actually fly. Yeah, and so a lot of
• 3:00
  Speaker 3: the tickets we've sold are well before the crisis. But
• 3:05
  Speaker 3: we buy fuel on the day, if you will, And
• 3:08
  Speaker 3: so the crisis impacts us even more because we're now
• 3:10
  Speaker 3: flying flights that were priced and sold well before the
• 3:14
  Speaker 3: crisis started.
• 3:15
  Speaker 2: You're losing money on.
• 3:15
  Speaker 3: And we honor those prices of course, so when fuel
• 3:20
  Speaker 3: prices start to settle, it'll take us a longer period
• 3:23
  Speaker 3: of time to recover some of those cost shocks that
• 3:26
  Speaker 3: we've had to bear, but we will work through that.
• 3:29
  Speaker 2: And so am I reading it right that what you're
• 3:31
  Speaker 2: saying is that what you are doing at the moment
• 3:33
  Speaker 2: in terms of trimming may last longer than the actual
• 3:37
  Speaker 2: the fuel impacts that we see. We may see fuel comeback,
• 3:39
  Speaker 2: but you're going to have to keep those trim flights
• 3:40
  Speaker 2: for a little bit long.
• 3:41
  Speaker 3: Yeah. As the fuel starts to come down, will start
• 3:44
  Speaker 3: to ease off on the trimming, but it'll be a
• 3:46
  Speaker 3: slowly slowly.
• 3:46
  Speaker 2: How do you feel about Quantus seating your lunch because
• 3:48
  Speaker 2: they are really going hard on New Zealand.
• 3:50
  Speaker 1: Ay.
• 3:52
  Speaker 3: Look in New Zealand domestically we do about three thousand
• 3:56
  Speaker 3: flights a week. Our competitor does around three hundred. Yeah,
• 4:02
  Speaker 3: and we have cut about five percent of our flights flying,
• 4:07
  Speaker 3: whereas in from Auckland to Wellington, for example, our competitor
• 4:13
  Speaker 3: has cut thirty four percent and about eighteen percent of
• 4:17
  Speaker 3: flying has been reduced from Auckland to christ Church. So
• 4:22
  Speaker 3: I'm not sure any lunch is being eaten.
• 4:25
  Speaker 2: Kire Enough Nichol, thanks for coming in man. I really
• 4:27
  Speaker 2: appreciate and beast of luck because I know it's a
• 4:28
  Speaker 2: tough Time at the moment Nicol Rebishanke in New Zealand CEO.
• 4:32
  Speaker 1: For more from News Talks at b Listen live on
• 4:35
  Speaker 1: air or online, and keep our shows with you wherever
• 4:38
  Speaker 1: you go with our podcasts on iHeartRadio