Air New Zealand CEO claps back after Auckland Airport’s criticism

Thursday, 20 February 2025

Spicy comments from Auckland Airport’s chief executive on Thursday morning, suggesting Air New Zealand is too dominant in the domestic travel space and not meeting the needs of consumers, have been rebuffed by Air New Zealand chief executive Greg Foran.

Speaking to The Post, Foran suggested Auckland Airport chief executive Carrie Hurihanganui was in no position to talk about monopolies given its own position, when asked about her comments.

Foran said the comments were “just a distraction” by an airport that held a monopoly.

“My concern is around having some checks and balances around a monopoly as it spends capital, and as those costs get passed on.”

Airlines have been critical of the scale of the $1.4 billion redevelopment, which they say is beyond what is required and will lead to higher airfares

Hurihanganui said on Thursday morning, in unusually critical comments alongside the airport’s half year result, that Air NZ was not meeting the needs of consumers or regional communities.

She acknowledged the carrier was facing difficulties with its fleet, “however, we are concerned that the 84% market share they hold over New Zealand’s domestic aviation market is not meeting the needs of consumers or regional communities.

“We think questions need to be raised about the competitiveness of the domestic aviation sector, with a focus on regional routes. Left unchecked, the benefits of tourism and travel to New Zealand’s regions will continue to be held back by fewer planes flying and lack of competitive airfares,” she said.

But Foran told The Post that Air NZ had tripled its regional turbo prop fleet from 11 to 31, and 70-75 aircraft in the fleet of 108 were concentrated on the domestic network.

Competitors, including Jetstar had previously had a go at serving the regions when the economy was strong and pulled out because they couldn’t make money, he added.

Air NZ had reduced capacity out of Wellington because government spending was down 25%.

“I can't sit idly by and not do anything when planes are going out and they're not as full as they should be,” Foran said.

Air New Zealand posted a subdued half year after-tax profit of $106m, down from $129m from a year earlier as it battles with ongoing jet engine issues.

Shareholders will receive an unimputed interim ordinary dividend of 1.25 cents per share. The dividend will be paid on March 19.

The board also announced a share buyback of up to $100m.

Passenger revenue fell 5% to $2.9b, driven by a 4% reduction in capacity due to fleet constraints and lower domestic demand, particularly in the corporate and government segments.

Also included within passenger revenue for the half was $10m of credit breakage for unused customer credits considered highly unlikely to be redeemed. This compares with $45m of credit breakage recognised in the same period last year.

Air NZ received $94m in compensation from engine manufacturers, but the airline estimates that first-half earnings would have been about $40m higher had it been able to operate aircraft as intended.

Average jet fuel prices were 16% lower overall for the period, and total fuel costs were down about 15% or $133m primarily driven by reduced capacity and lower Singapore jet fuel prices.

Higher non-fuel operating costs of $100m for the half, including landing fees, labour and engineering materials continued to weigh on the airline’s financial performance.

The airline noted that the 2025 financial year would be the first full 12-month period affected by global additional engine maintenance requirements on the Pratt & Whitney and Rolls-Royce engines fitted to its Airbus A320neo and Boeing 787 Dreamliner fleets.

For the second half of the financial year, Air NZ’s best estimate was that it would have up to 11 jet aircraft grounded at times as a result of those requirements, however, the airline noted a large degree of uncertainty existed regarding engine maintenance timeframes.

“This is a significant volume of aircraft to have on the ground, but we continue to take steps to build resilience into our operations through schedule adjustments, leasing additional engines, and prioritising customer experience improvements,” said Foran.

In light of these aircraft groundings, the airline expected performance for the second half of the 2025 financial year to be significantly lower than the first half, he said.

Air NZ would not be giving guidance given uncertainty around the aircraft grounding.

Over the next year more than half of the 787-9 fleet would be refurbished with new cabin interiors.

Additional leased engines were expected to arrive soon and a new uniform would be revealed in the next few months.

Air NZ shares were up 2.4% to 64c in later morning trading.