Latest / Best of Business / Oliver Mander: NZ Shareholders Association spokesperson on Air NZ downgrading earnings expectations

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Oliver Mander: NZ Shareholders Association spokesperson on Air NZ downgrading earnings expectations · Best of Business

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  Speaker 1: You're listening to a podcast from Newstalk ZEDB. Follow this
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  Speaker 2: Now In New Zealand's new chief executive has been in
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  Speaker 2: the job for what three days, and already has had
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  Speaker 2: to deliver bad news to shareholders. The company has downgraded
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  Speaker 2: its first half earnings expectations from a thirty four million
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  Speaker 2: dollar profit forecast to an up to fifty five million
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  Speaker 2: dollar loss. Oliver Amander is the chief executive of the Shareholders'
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  Speaker 2: Association and with US Now Hi Oliver, good evening, have
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  Speaker 2: Is this just a case of really bad luck with
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  Speaker 2: the domestic recession in the US competition and the engine problems. Well,
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  Speaker 2: that's a.
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  Speaker 3: Pretty good summary of what's really been impacting them, Heather.
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  Speaker 3: But look these things, it's the outcome of some decisions
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  Speaker 3: made a long time ago, as is the long term
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  Speaker 3: nature of the airline business. Yeah, they're really suffering because
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  Speaker 3: of that sort of week domestic economy in New Zealand.
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  Speaker 3: The engine issues are hitting them hard and then really
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  Speaker 3: unfortunate for them thing is for them that they are
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  Speaker 3: working hard to preserve what capacity they can on their
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  Speaker 3: key routes and their key hub in Auckland, but that's
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  Speaker 3: not necessarily helping them actually rebound in terms of the
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  Speaker 3: growth that's occurring in the wide airline sector. So we
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  Speaker 3: are seeing Quantus, for example, utilize their capacity to actually
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  Speaker 3: challenging these zealands and key routes and yeah, so that
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  Speaker 3: they're they're ruined that the cost, the long term cost
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  Speaker 3: of those engine issues and the lack of capacity that
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  Speaker 3: that's giving them, and that's really showing up in these results.
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  Speaker 2: What are these decisions, these decisions that were made a
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  Speaker 2: while ago that you were referring.
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  Speaker 3: To, or just in terms of the and this isn't
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  Speaker 3: anyone's issue, but it's just those decisions that related to
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  Speaker 3: the plane selection, engine selection and then how that's played
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  Speaker 3: out in the longer term.
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  Speaker 2: Yes, do you have any concerns about the way the
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  Speaker 2: business has been run in recent years? Such as I
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  Speaker 2: don't know, No, I'm asking you. I mean, if it
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  Speaker 2: is just a case of like a series of unfortunate
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  Speaker 2: events that have happened to them, then that is just
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  Speaker 2: what it is. Is there anything about way that it's
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  Speaker 2: been run that you're worried about or is it simply
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  Speaker 2: the bad luck?
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  Speaker 3: I think they've been hit by a perfect storm of events.
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  Speaker 3: And whether you call that luck, it probably is more
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  Speaker 3: luck than actually decisions that they've made to themselves. And yeah,
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  Speaker 3: and that's not been great, great outcome for shareholders. They Yeah,
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  Speaker 3: that they have suffered from that lack of capacity that's
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  Speaker 3: hinted their growth and hindered their ability to actually create
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  Speaker 3: some great results. But I think this little long term
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  Speaker 3: impact of this, you know, they have been losing out
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  Speaker 3: in terms of the capacity that they've been able to
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  Speaker 3: provide on those key routes and there's a long way
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  Speaker 3: to come back from that. Yeah, And obviously as competitors
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  Speaker 3: that filled that space in New Zealand is effectively lost
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  Speaker 3: market share. I think will be really interested how that
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  Speaker 3: long term, how that long term resolution.
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  Speaker 2: Which is to say that it's not going to be
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  Speaker 2: a quick flace. This is a long battle that they've
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  Speaker 2: got ahead of them, isn't it.
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  Speaker 3: It is a long battle and it's not a quick fix.
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  Speaker 3: You're absolutely right. So, and that they have done their
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  Speaker 3: best to mitigate that. They've leased planes, they've taken other
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  Speaker 3: actions that they can at least put some capacity on
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  Speaker 3: those routes. But those those least planes and those least
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  Speaker 3: engines do come at a cost as well, and that's
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  Speaker 3: probably impacting these short term results. So for them right now,
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  Speaker 3: it probably does feel a bit like a trade off
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  Speaker 3: between results right now in the short term and actually
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  Speaker 3: preserving their strength in the longer term.
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  Speaker 2: Oliver, while I've got you, do you have any opinion
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  Speaker 2: on the softening of the Climate Disclosure rules today?
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  Speaker 3: Oh? Yes, Look, the issue associated with CRD has really
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  Speaker 3: was set back when it was first implemented, and that
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  Speaker 3: was really where New Zealand took the somewhat unique approach
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  Speaker 3: of applying the regime to listed companies only and excluding
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  Speaker 3: every other unlisted company. And it's a pretty arbitrary and
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  Speaker 3: discriminatory way to base a regime. So essentially that created
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  Speaker 3: the conditions where you had regulary arbitrage where private companies
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  Speaker 3: did not want to list on the exchange in the
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  Speaker 3: context of that cost and boss that was coming up.
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  Speaker 3: And look, I've got no doubt that were relaxing that
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  Speaker 3: threshold to by a significant degree will it will help
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  Speaker 3: the exchange at least to some extent, but it doesn't
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  Speaker 3: take away that fundamental regulatory of charge that exists. And
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  Speaker 3: actually what it does do is it puts at risk
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  Speaker 3: New Zealand international investor confidence in New Zealand is a
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  Speaker 3: credible place to invest as well. You know, we're walking
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  Speaker 3: backwards from those commitments. That's differentiating us from the world
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  Speaker 3: in terms of the progress that they're making in terms
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  Speaker 3: of their disclosures. That this is a really nuanced argument,
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  Speaker 3: and it does feel a bit like the government's taken
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  Speaker 3: a very blunt as to solve what is actually a
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  Speaker 3: really nuanced problem. It's good to talk to you, Oliver.
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  Speaker 2: Thank you very much appreciated, Oliver Amanda, Chief Executive of
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  Speaker 2: the Shareholders Association.
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