Outcome of business review aims to improve financial performance.
Air New Zealand has just announced the outcome of a wide-ranging review of its business, following its recent profit downgrade for the 2019 financial year. CEO Christopher Luxon promised the outcomes would “positively impact revenue growth, capital efficiency, operating costs and the customer travel experience into 2020 and beyond”.
Key outcomes include planning for slower network growth of 3-5% on average over the next three years, compared to previous forecasts of 5-7% to reflect a “slower demand growth environment”.
Network growth will focus on stimulating tourism to, from and within New Zealand, by tapping into new markets including the launch of new non-stop services between Auckland and Seoul in November this year. Frequencies on NZ’s Auckland-Taipei and Auckland-Chicago services will also increase, while the timing of the airline’s Auckland-Hong Kong service will change to free up an aircraft.
Luxon has also announced delivery deferrals for three A321NEO and one A320NEO aircraft, while two long-haul wide-bodied aircraft, intended as part of a program to replace B777-200s, will be deferred for at least four years. However the airline’s 14th B787-9 aircraft will come into the fleet as planned in October this year.
A two year cost reduction program will deliver more than $60 million in additional annual savings based on removal of inefficiencies related to the global Rolls-Royce engine issues this year, a 5% reduction in overheads and a “targeted review of the operations cost base”.
The NZ CEO noted that the carrier would continue to invest in the customer travel experience, including the progressive introduction of an enhanced Business Premier experience on its long haul fleet later this year, a more spacious long-haul Economy product offering from mid-2020, the upgrade of nine lounges across the network over the next two years, and the “implementation of free wi-fi on all enabled international aircraft from today”.
More details in today’s issue of Travel Daily.