Air NZ tips quick benefits

By CHRIS DANIELS aviation writer

Air New Zealand says it will see many of the benefits of its four-year plan to save $245 million a year within the next two years.

Outlining more details of the plan, which will shrink the airline's workforce by 15 per cent - about 1500 jobs - chief executive Ralph Norris yesterday would not make a profit forecast.

But he said the company was trading satisfactorily, and a decision on whether to publish a forecast would be made before next week's annual shareholders meeting.

Its last forecast for the full year said earnings were "comfortably on the positive side of $200 million".

The airline made a profit of $220 million last year. Its shares closed up 2c at 53c yesterday.

One of its rising stars, its new group manager for airlines, Rob Fyfe, said the new strategy included "scores of initiatives".

Significant changes would happen within 18 months to two years.

"Benefits from pursuing this strategy start flowing to the bottom line very quickly," he said.

About $90 million, of the $245 million in savings, came from labour savings, including 300 or 400 compulsory redundancies.

Fyfe gave the first comprehensive look at what Air NZ might look like in five years.

He said the airline would customise itself more, depending on the length of trip being flown.

It would continue being a network airline, flying people to, from and within New Zealand.

But different flights would have a "different offering".

Domestic flights have already been changed dramatically.

A new low-fare option has boosted passenger numbers by a million a year.

Fyfe said the strategy was not a radical new way of operating an airline, but Air NZ was a unique airline. Few others did the same sort of flying.

Flights to Pacific Island destinations, to Los Angeles and on to the UK would continue.

Fyfe said 48 per cent of all customers at Wellington Airport were using new electronic self-checkin kiosks, an example of how technology could streamline travel.

One of the biggest changes to the Air NZ fleet of planes will be in its long-haul fleet, where between $150 million and $200 million will be spent upgrading its eight Boeing 747-400 fleet with new entertainment systems and lie-flat business-class seats.

The upgrade expenditure is expected to come in the 2005 financial year, rather than next year.