Air NZ weighing options to recoup fuel disruption costs but says fares won't go up

Former prime minister Sir John Key was elected by shareholders to Air NZ's board. Photo / Grant Bradley

Air New Zealand is still dealing with the lingering impact of the fuel pipeline failure but is now looking at recouping costs and will push for an overhaul of infrastructure.

Chief executive Christopher Luxon said the airline's lawyers were looking at how insurance could cover losses from the two-week fuel shortage and whether there was any other action it could take.

The company reiterated at its annual shareholders' meeting that the disruption caused by the rupture of Refining NZ's pipeline would not materially affect earnings in the current year. But speaking after the event Luxon said there had been a financial impact.

"It's quite hard to run an airline with only 30 per cent of the fuel so we've had a lot of focus on that in the last two weeks but from now with our commercial focus we'll start to look at what insurance options we have and any other remedies we may have as well."

Luxon said passengers would not pay through fares for losses suffered by Air New Zealand, which has its hub at Auckland Airport where fresh supplies of jet fuel were completely cut for a week.

I think its a timely wake-up call for us to sit around the table and consider what the critical infrastructure New Zealand needs so this won't happen again.

Christopher Luxon

While there had been good collaboration by all involved to minimise the impact of the crisis it was now time for a reassessment of infrastructure. His airline had highlighted the fuel system's vulnerability several times during the past 14 years.

''I think its a timely wake-up call for us to sit around the table and consider what the critical infrastructure New Zealand needs so this won't happen again. Irrespective of which government emerges that's going to be a focus area for them and we've obviously got a lot of energy around that subject."

Luxon said his airline's primary focus would be to increase the capacity of storage at the Wiri fuel storage depot.

"I think the oil companies can pay for that investment - it's very necessary and very needed."

Airlines are still being rationed to 80 per cent of normal daily use - up to four million litres a day - out of Auckland Airport. For Air New Zealand this meant some long-haul flights would still have to stop in the Pacific or Australia to top up.

Restrictions are due to be lifted at midnight on Friday.

While disruptive for some passengers the airline had managed to get most of its 40,000 passengers a day to where they needed to go.

"We did have some disruptions and delays but in the context of what we were dealing with there were a relatively small number of customers affected."

He told shareholders at the meeting in Auckland that staff volunteered to help minimise disruption.

"We  had  more  than  100  Boeing 777 and 787 pilots volunteering to help support crews on flights that needed to refuel in Australia and the Pacific Islands as well as operate empty widebody aircraft to Wellington to refuel."

Chairman Tony Carter said Air New  Zealand's earnings of $527 million in the last financial year provided a sustainable platform for future earnings.

Earnings in the first quarter of this year had been pleasing, he said.

While the airline was 70 per cent hedged on fuel, prices had been higher than earnings assumptions recently and it remained volatile.

• Former prime minister and tourism minister Sir John Key was re-elected to Air NZ's board after his appointment at the beginning of the month. He told shareholders he brought to the board ''a range of skills and experiences''.