Air New Zealand chief executive Greg Foran. Photo / Alex Burton
Air New Zealand chief executive Greg Foran. Photo / Alex Burton
Greg Foran began work as chief executive at Air New Zealand the day after the airline announced it was suspending services to Shanghai as Covid-19 hit. From there, things rapidly got worse as a health scare became a pandemic, air travel was almost completely halted and the airline faced collapse.Aviation’s biggest commercial catastrophe landed in the lap of airline newcomer Foran, a veteran of global retailing. In an exclusive interview with Weekend Business, he describes the darkest days of the past three years, where the airline is now on its recovery path, what his own plans are, how he gets on with the Government and what he thinks of accusations of price gouging. Within months of the pandemic hitting – with most planes grounded and thousands of jobs being axed – Air NZ devised a three-pronged strategy: Survive, Revive, Thrive. During the interview at the Trenz tourism showcase in Christchurch, Foran says the airline is in the Thrive stage - just.
“I do feel there is a spring in the step in the business and I think that really started to happen about six weeks ago. I’d hoped we’d get there a little bit and we’d got ourselves through Christmas and we are building nicely in January and this is across all kinds of metrics, not just operation and revenue metrics.
“And then unfortunately we had first of all the Auckland floods, and then two weeks later, the cyclone, and those two events saw us disrupt 100,000 people. That’s a lot of rebooking, a lot of phone calls to do, a lot of juggling of planes and people and all the other things. We knew by the time we got to the middle of March, we needed to get our rhythm back and we’ve done that, and April was considerably better than what we were in April 2019. We weren’t just back to where we were, we were ahead of where we were.”
A year ago, Air New Zealand successfully completed a $1.2 billion equity raise, allowing it to repay a Government loan after false starts and delays. Now Foran uses a rowing term – getting “our swing back” – to describe the state of the airline and how he feels about work.
“You start to really enjoy the job as opposed to thinking ‘I’ve still got to get capital raises away, we’re there with the equity but then we’ve got to get on to debt, or is there some other structure that we need to put in place?’ You’re dealing with one issue after another after another and we’d set ourselves an objective that we just didn’t want to restart, we wanted to restart better. Despite the fact for the last two and a half years, we’ve been doing all this other stuff, we’ve also challenged ourselves to work out how are we going to become a world-leading digital airline or how are we going to re-platform our loyalty system or how are we going to put in a better flight navigation system? You’ve got to be ambidextrous. But I’ve done this a few times in different countries and different businesses. And you can feel after a while when the flywheel begins to turn and I can now feel that here at Air New Zealand, for the first time since I’ve been on board.”
Early in the pandemic, the airline faced the prospect of collapse for the second time since 2001. From the start of the crisis, Foran was a study in stoicism and that hasn’t changed.
“What you’ve got to do is just get on with it. If you spend too much time gazing down at the floor and not lifting your sights, then you can become immersed in all the issues that you’ve got. And I think it’s in times like that, not just me, but I think any leader of a team of four or a team of 400 or a team of 4000, that’s your time to step up and, you know, getting that balance right between a sense of realism, but a sense of optimism. I’m glad that we’re through that - and now we can thrive. Thrive isn’t just about we’re in the black and we can make lots of money ... but it’s also thriving in terms of coming up with better things for our customers, our staff, our communities. It’s so important for Air New Zealand, for example, because domestic is so key to our strategy that when a place like Gisborne and Napier gets hit that we work out how we can get some flights on there because the road’s gone, and I can tell you that that’s not just goodwill for the community, but it actually feels good in Air New Zealand to do those things.”
Foran’s previous job was heading Walmart in the United States, before he faced enormous pressure as the unprecedented collapse of airlines started just weeks into the Air NZ role. His experience in big jobs was crucial.
“I think it just comes down fundamentally to experience - it’s not sort of my first rodeo. I’ve had challenges in other markets that I’ve worked in. China was quite a challenge when you’re leading an American company like Walmart ... or in the United States, having to go through a reset of the biggest part of their business - 5000 stores - having to go up to Wall Street and deal with the analysts as you reset guidance down. Issues I had to deal with in the United States [ranged] from shootings in stores to really terrible weather events. Certainly, Covid has been different and the thing that’s been different about Covid is that it was over 1000 days. [That] requires a degree of grit, a stamina that I haven’t had to use before, but you just get on with it because you have to.”
There were farewells for close to 4000 staff, including cabin crew, airport workers, and many of the airline’s top executives. Did being new to the business make that easier?
“I wouldn’t say it was easier [but] I don’t think I ever fully appreciated how difficult it was until later. Not long after about a third of the staff had left the business we were having a meeting and [I was shown] an internal farewell video. And what I saw as they got played is just the raw emotion in the business where 100 people just started crying. I’ve had to do difficult things in the past, but I think a combination of [being] new to the business, and the length of time that this had gone on really brought it home to me how difficult that period was. But at the same time, you’ve still got to fly a plane that afternoon because we flew every single day of Covid, but you’ve got to put on the face and you’ve got to lace your boots up and you’ve got to go out there and play, even though you’re dealing with the raw emotions.”
Air New Zealand parked planes and made thousands of staff redundant early in the pandemic. Photo / Brett Phibbs
The role of Air New Zealand chief executive has a profile in the business sector and wider community akin to high-ranking politicians and sports captains. How does this sit with Foran?
“I have been surprised. I didn’t realise quite how much of a magnet Air New Zealand is. As I do things like [helping out on planes] the number of people who will sort of stop me and talk about ‘their airline’ and ‘this is my airline’, and that has surprised me, mostly in a good way. You lose some of your anonymity and that’s something that I personally value. I stick in long hours at work and I go really hard but I’m a reasonably private person - but once again, it goes with the territory so you get on with it.”
The Government owns 51 per cent of the airline and provided backstop loans, invested in equity raises, and delivered wage and cargo subsidies, so taxpayers have an even greater financial stake than before the pandemic. What does he think of that level of state involvement?
“I’ve been in businesses where you have a majority shareholder (the Walton family owns 51 per cent of Walmart) and you can have directors and executives that are very keen to do something but at the end of the day, if the family or the government decide they want to do something else, then you have to accept that they have the right to pull that card. Part of my job is to make sure that you don’t ever have to play that card because if I’m doing a good job and building a good plan and working closely with the board and the board are working closely with the owners - the Government. Then everyone is in lockstep and you’re in a situation where you’re not ever really at odds because people have agreed the direction, the plan and how you’re going to deliver it.’’
Foran talks often about the five-stakeholder model. Why is that so important?
“What I hold dear to my heart is the five-stakeholder model. Absolutely, I’ve got a responsibility to the shareholder but if I do that at the expense of, say, staff or customers or suppliers or the community in which we operate, then I get the business under a lot of pressure. I’ve watched that play out in other businesses where they will pick their own stakeholder group, go particularly hard on that for a long period of time but there’s a course correction at a point. The balanced scorecard sits very comfortably with us.”
How does he get on with shareholding minister Grant Robertson?
“Good. We don’t talk regularly, but if I need to talk to Grant, he’s on the phone and if he needs to talk to me, I’m on the phone and we’ll talk to each other two or three times a year. The chair (Dame Therese Walsh) and myself will meet with him and update him on how we’re going. He’s got some clear objectives that he wants out of Air, New Zealand and not surprisingly, to my previous point, those objectives are the same ones that we’ve got.”
The airline is on track for a pre-tax profit of $510 million to $560m for the full year, reversing heavy losses in the past three years. Is there a risk of making too much money amid a cost-of-living crisis and accusations of price gouging?
“I’m not trying to say that we’re running a charity - we can’t run a charity. If we run a charity, I can’t spend $3.5 billion to update either the 14 wide-bodied aircraft we’ve got or replace the 777s over time. It’s important at this point to get that right. You get a terrible event like we had in Auckland where the floods occur - it’s weather-related but that’s not up to Air New Zealand to have to deal with it, but we’ve got people sleeping on the floor in Auckland Airport, they can’t get accommodation so we worked really hard and had probably spent $500,000 to $600,000 paying people for accommodation. All the time, not just myself, the board, CFO Richard [Thomson], the leadership squad, are saying to ourselves ‘what do we think are the right levers to pull and how do we want to adjust these dials taking into account these five stakeholders?’”
How important is it to generate profit so the airline can get the Government off its back?
“We’ve paid them back, we paid them back the day after we completed the equity raise so we don’t owe them any money and that was always part of the deal. We’re fortunate that they were there to be able to provide that loan for us, but that’s all it ever was. The second thing is, we clearly participated in the wage subsidy, but no different than any other business. And of course, they helped us with cargo, that MIAC [Maintaining International Air Connectivity] scheme was particularly beneficial, but it also supported the country, not just in terms of moving goods and services. It allowed us to repatriate Kiwis who wanted to get home, as well as moving cargo. The Government has been very supportive and we’re grateful for that, but we’ve had to pay our own way. I know that a business that is not consistently delivering profits is not a proper business. You’ve got to make a profit, it can’t be too much, but it can’t be too little – it needs to be fair.”
Air New Zealand will spend $3.5b on new planes and refurbished cabins Photo / Supplied.
How long have you got left your role?
“I’m really enjoying what I’m doing. I actually am very fortunate in that. I like going to work. Work is not actually a job to me. I’m probably at my worst on Sundays. I like doing my job and I’ll be there as long as the board want me to do it.”
(Board chair Walsh said this week: “Greg’s doing an outstanding job and we’re really looking forward to seeing him deliver on our strategy and take Air New Zealand to a new level.”)
Foran amassed a fortune before starting work at Air NZ. He was paid $20m a year before he left Walmart, compared to $2.3m at the airline. On the bad days, is he ever tempted to give up work?
“Of course there are some days that you wish there were other things that you were doing. I think you’d be in denial if that didn’t happen to you, but they’re rare. I prefer to look at things as being a glass half full rather than a glass half empty. I like having ambition, not just for me, but I like having ambition and creating ambition for other people, for other organisations. And so I feel that if I’ve got a role that I can play there, then and I’m enjoying doing it, then get on and do it. I don’t tend to dwell on negatives. I look for the positive aspects.”
What would he have done differently over the last three years at the airline?
“I’ve oscillated a bit at times between wishing I’d known a lot more [but] in some ways it was helpful I didn’t know a lot more because then I could see things with a slightly clearer lens. The answer is both are right. I was in Europe just a week ago and caught up with [Ryanair chief executive] Michael O’Leary. I wish I was a quarter of the chief executive for an airline that he was - what an incredible leader. He’s forgotten more about airlines than probably I will ever learn. If I’d have had some of his experience, there are some things I would not have done right at the beginning of the crisis. We wound the call centre down. If I’d known how hard it was to get people in that area and train them up, I would have said for this period that we were all locked down, we’d just wear the cost.”
Was it wise to dispose of the seven Boeing 777-200s?
“Those planes had actually got to the end of life - to keep them flying would have required an inordinate amount of engineering maintenance. We made the right decision. Now, it gets us to a situation where we’re running at about 91 per cent of our capacity internationally. It does mean that the planes we’ve got, we’re flying a lot. That’s good from a productivity perspective.”
And the waves of redundancies?
“If I was smart as Michael O’Leary, I’d do things a little bit differently. There’s been 680-odd pilots retrained and that’s a lot of [simulator] sessions. If I’d have had more experience, there are some things there that I would have been better prepared to deal with. It’s worked out, we’ve got there, but you’re wiser after the event.”
What does his work week look like?
“As you can imagine, I spend a lot of time at work. I’m usually in the office 6.30 in the morning and we’ll get home 7pm. Most weekends, generally a Saturday, I’ll be out for a number of hours around the network. That’s my time to get out and get to airports or get to our ops centre. When I get to spare time, it’s time with the family.” (He has three adult children in Australia and he and his second wife have a child who was born late in 2020).
What’s the advice to other people in business, to get from survival to thriving?
“I think having a narrative that helps you get through that, I think it was ... a good process for us to go through to say this is going to be a process of survive, revive, thrive and it’s turned out to be pretty much that. You might say that was a bit of good luck and a bit of good management. It actually doesn’t matter. But having that narrative and anchoring your journey around that, I think has been incredibly helpful, not just for me, but I think for the organisation. You can’t ever underestimate the importance of good communication and lots of communication. That’s something that we spend quite a bit of time on at Air New Zealand: making sure that we’re very unvarnished with how we see the business and how we communicate with people. Generally, on a Sunday I will end up writing an email that goes out every Monday to every staff member in Air New Zealand and it’s what’s on my mind.”
Greg Foran:
Born: July 22, 1961
Primary education: Twyford School Hastings. Secondary: St John’s College, Hastings; St John’s College, Hamilton; Hillcrest High School, Hamilton.
Married with four children
Before joining Air NZ in 2020 he worked for Walmart in its international division and has served in a number of roles, including as president and chief executive of Walmart China, before taking on the role of CEO and president of Walmart USA in 2014
Previously Foran held positions with supermarket operator Woolworths, both in Australia and New Zealand.
