Air NZ cuts 400 international crew jobs, more possible

Air New Zealand’s wings have been clipped yet again. It is cutting almost 400 more international crew jobs and is looking to make several hundred other workers on leave without pay officially redundant.

The national carrier reported a $454 million loss for the year ended June and has slashed 4000 jobs as it struggles to stay in the air after Covid-19 decimated international aviation.

Air NZ is burning up to $85 million a month just keeping the doors open, and it has started drawing down a $900 million government loan.

It is also planning a capital raise by mid-2021.

Chief executive Greg Foran had hoped there would be a fully-fledged trans-Tasman travel bubble by now. He told Checkpoint without it the airline has been forced to shed yet more staff.

“They are our international long-haul crew, and that’s come about through us making a decision that the 777s aren’t going to be back for some time,” Foran said.

“Also the fact that international borders that we’d hoped we were going to see some action across the Tasman and Pacific Islands by now hasn’t eventuated.

“So we’ve got too many, and in light of what we’re seeing, we think it’s appropriate that we take that action.”

It leaves Air New Zealand with 205 long-haul crew staff, Foran told Checkpoint.

“We’ve had about 500 on furlough, effectively leave without pay, and that allows us to get that crew back a bit quicker.

“We’re having a discussion with the union around how we handle those crew.

“It is complicated because the 500 who are on furlough had already been made redundant, and then opted instead of taking redundancy to go on furlough.”

Foran said he is hopeful the company can get the staff back on furlough.

“Under the law, we have to follow this particular process and clearly our intention is to get these people back as soon as we get borders open but, as you can understand, that’s not something that’s in my control,” he said.

“We would love to be back flying across the Tasman and flying to the Pacific Islands. And I’m hopeful that at some point that’s exactly what we can do but like everyone else we’re waiting to see when that will occur, we’d hoped it was actually going to be up and operating now.

Foran said the company is fortunate to have a high performing domestic market.

“We’re up and running, we’re running circa 70 to 80 percent of pre-Covid volumes.

“In terms of outsourcing and whether that happens [in the future] that’s a discussion and a decision that once again requires detailed analysis. We don’t have any plans to outsource cabin crew at this point.”

Foran said he is not ruling it out.

“It’s very difficult to predict in the future exactly what’s going to happen in the airline business.

“I think that would be a foolish position for any business to take… I don’t know, we’ll have to wait and see.

“The reality is we’re not investigating that at this point. But like any business, you would want to continue to consider options, particularly when you’re dealing with a crisis like we are in the airline industry.”

Money had already been put aside to deal with redundancies, Foran said, but the company’s objective is to get people back on furlough, based on the feedback they have had from affected staff members.

Documents show Air New Zealand has paid back more than $3 million in wage subsidies, but Foran told Checkpoint he was not aware of that.

He would not say exactly how much of the government’s $900 million loan had been drawn, due to market sensitivities, but Foran has told the market Air NZ is burning through $65 to $85 million a month.

“We continue to have good dialogue with the government and, as we’ve said previously, we’re working closely with them as we think about the capital structure for in New Zealand.

“The loan was only ever put in there as a short-term facility before we work out what else we do, and we’re working well towards pulling together the right plans.

“Before June 2021, we would hope to be in a position … to have a new capital structure at Air New Zealand.”

The government’s freight contract with Air New Zealand has been extended from the end of December to the end of March, Foran said.

“It’s very valuable, it’s allowing us to fly about 10 of our 787 dreamliners, which equates to about 50 flights a week.

“As we get into the summer season, what’s going to happen is there’s a chance that we could get a couple more planes up in the air than that. Maybe get up to 60 or 70 flights a week.

“We’re working closely with the Ministry of Transport and have just put a submission in for the period of January through to March, and we’ll have to wait to see how much of that is granted to Air New Zealand.

“We’re hopeful of getting the lion’s share of that, and it is very important to us at the moment, and very important to New Zealand because it’s allowing product to be both exported and imported.

“If we didn’t have the benefit of a freight contract, I would have to seriously consider whether we would fly internationally.

“The freight contract is allowing us to get those Dreamliners in the air. Move freight, move some passengers and keep a number of our pilots and crew current. So, it’s critically important to us.”

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