The country’s national airline, Air New Zealand, has scrapped its financial forecasts for the current year because of the uncertainty caused by the Covid-19 virus, as it cuts more services and freezes hiring, Radio NZ reported today.
Last month it cut its forecast of underlying earnings to be in the range of $300m-$350m from $350m-$450m, estimating that the virus might cost it as much as $75m.
CEO Greg Foran says the airline is now facing an unprecedented situation and it is difficult to predict future demand.
“We have been continuously monitoring bookings and in recent days have seen a further decline which coincides with media coverage of the spread of Covid-19 to most countries on our network as well as here in NZ”
The airline is to make further cuts to services, mainly in Asia where it is suspending flights to China until the end of April, while it will rejig its trans-Tasman services and reduce Pacific and domestic flights.
Capacity into Asia has been cut by 26% and the overall number of seats across the network will be about 10% lower.
Air NZ will also cut costs, with a freeze on hiring, voluntary unpaid leave for operational staff, and eliminating non-urgent spending.
Foran reiterates Air NZ is a strong and resilient business operated by a world-class team with deep experience, after navigating earlier shocks to its business and industry.
“While we have already made swift adjustments to our operations, we are prepared to take further actions to address the ongoing demand”.
Clearly, the airline sees the need for drastic action as it confronts the challenge of the coronavirus pandemic.
The element which impressed Point of Order most about the airline’s action is the decision of its CEO to take a voluntary 15% in his base salary of $1.65m a year.
That represents a cool $250,000 over 12 months.
It sets an admirable example for other CEOs to follow.
And perhaps not just business leaders …
Wouldn’t it be splendid if politicians picked up the challenge and handed back 15% of their salaries?
The government is said to be considering how to target taxpayer money to businesses struggling against the effects of the pandemic. It may need to look at wide-ranging measures.
Surely the PM Jacinda Ardern, noted for her kindness and compassion, will want to be in the forefront of how to meet the challenge facing the population?
And Winston Peters, always keen to show he is politically connected to superannuitants, could be expected to be on the frontline, too.
Foran who only stepped into the post at Air NZ in February, came to the role after rising to the top of the US giant Walmart. The airline was lucky to land his services.
Now the nation should be grateful for his demonstration how to be a real leader.