Air N.Z. slashes jobs, international routes

The head of Air New Zealand, Greg Foran, has revealed his company will have to cut 3,500 staff amidst the coronavirus pandemic, and that it will take years for the airline to return to its former size.

In a statement the Chief Executive Officer said the shrinking airline is facing NZ$5 billion per year in lost revenue, after making $374 million in profit in 2018-19 and $5.8 billion in annual revenue.

The impact on Samoa’s Air New Zealand office, which employs nine local staff, has been contacted for comment. 

With international tourism accounting for two-thirds of the national carrier’s revenue, the gutted tourism industry will affect both international and domestic routes.

“In that light, it is clear that the Air New Zealand which emerges from Covid-19 will be a much smaller and largely domestic airline with limited international services to keep supply lines open for the foreseeable future,” Mr. Foran said.

The 12,500 strong global staff body (costing $110 million a month) will be shrunk by at least 30 per cent over the next year, with 3,500 roles in New Zealand and abroad slated to go.

While the New Zealand Government wage subsidy programme and $900 million loan facility will go some ways to keep the airline going and have helped reduce the level of staff cuts, Air New Zealand will not look the same after cutting more than 95 per cent of its flights to manage a drop in ticket sales and global travel restrictions.

“Before Covid-19, we had annual revenue of around $5.8 billion and made a profit of $374m in the last financial year. We also had around a billion dollars in the bank in case an unexpected event hit our business,” Mr. Foran said.

“We are working with the Government to determine how the subsidy can be applied in our business and in turn to the benefit of our people. The subsidy is, however, a short-term measure and doesn’t right-size the business for the future, especially when you consider that even in a year, we will be 30 percent smaller than we are today.”

The 30 per cent cuts are “conservative assumptions,” Mr. Foran continued, saying if border restrictions remain for a long time, the staff cuts may grow.

Air New Zealand’s own changes will be rippling to its suppliers and connecting agencies, whose own workforces will likely shrink too, he added. 

Mr. Foran also said the airline is looking to help the laid off staff “transition out of the business” with redeployment opportunities, and a raft of free services for employees like budgeting support, career advice and counselling. 

“These are unprecedented and challenging days,” he said.

“However, I am confident that by taking the necessary measures now, Air New Zealand will get through this difficult situation and one day return to serve all our destinations at home and many more around the world.”

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