Air NZ Chief Executive Greg Foran warned that many airlines were running out of cash. "My best guess... is that a third of the airlines that we see today will disappear, if this carries on into next year."
Air New Zealand chief executive Greg Foran today set out how hard yesterday's alert level extension has hit the struggling airline.
And he says there is no sign of new international bookings being allowed, meaning the airline's skeleton schedule is essentially a freight business with a small number of passengerswho already had tickets flying home.
But in spite of that, and the latest blow to domestic flying, he is confident Air NZ will bounce back.
The continuation of alert level 3 in Auckland and level 2 in the rest of the country until August 26 means Air New Zealand has had to slash its schedule, while Jetstar is suspending its domestic operation altogether for at least eight days from Wednesday.
Both airlines had roared back on the domestic network under level 1, with Air NZ more than 70 per cent of its pre-Covid level and Jetstar at 90 per cent.
Air NZ will operate its current domestic schedule over the weekend but from Tuesday this will be sharply reduced.
Foran told the Herald this would mean flying through Auckland would fall back to about 5 per cent of pre-Covid levels.
From Auckland there will be 13 weekly returns to Christchurch, 3 to Gisborne, 7 to Kerikeri, 3 to Napier, 3 to Palmerston North, 3 to Tauranga, 7 to Wellington and 7 to Whangārei.
The remainder of the network - which is under level 2 - is unchanged but physical distancing requirements mean capacity on turbo prop planes will be cut to around 50 per cent. He said this had meant some extra flights had to be run where there was strong demand.
Air NZ had been planning for the scenario which unfolded last night, Foran said. Its domestic operation makes up a third of its business and there had been a strong recovery in corporate and government bookings as well as leisure travellers.
"This was something we prepared for - we had prepared for the fact Auckland would be locked down. The team was ready for it, clearly it's not ideally what we wanted."
Many Air NZ aircraft have been grounded since April. Photo / Brett Phibbs
However, he was confident demand would rebuild quickly, once the Covid community spread had been contained and the country was able to move down alert levels.
"We'll have to wait and see but my sense is that New Zealand will bounce back from this one quite strongly. Just as we've developed a muscle for winding down the domestic business and then getting it up and running again we'll be good at doing it again a second time."
The airline has had to lay off more than 4000 of its 12,500 staff but the domestic rebound had allowed it to rescind about 100 redundancies.
Foran said there were no plans to lay off staff as a result of the latest restrictions.
"At this stage no - I'm sure that New Zealand will bend its back to resolve the current situation and we can get back down to level one and in time this will just be wrinkle," he said.
"If it this goes on for some period of time then we have a look at the cost base of the business again."
Late last night he announced this morning's flight to the Cook Islands would be a freight flight only as a result of the risk of 41 passengers from Auckland posed to the country's Covid-free status.
"I think it's a very sensible decision with the state of play in Auckland that we don't carry passengers."
The Cook Islands has since closed its borders to any incoming passengers.
Foran said the airline's international schedule was operating at a fifth of previous levels and was now mainly a freight business which has been further helped by a three-month extension of the Government's air cargo subsidy scheme until the end of the year.
"We do move some passengers on the back of it but we're operating at best 20 per cent of the prior schedule."
He said a meeting led by the Ministry of Transport yesterday had not shed any more light on when new international bookings might resume. They have been suspended to ease pressure on isolation and quarantine facilities.
"That's something that everyone is looking at and seeing what demand is but at this stage there is no change."
More staff were being Covid-tested at airports, along with senior managers.
"There is plenty happening in terms of testing at the airport, our leaders are getting tested and we're strongly encouraging all our staff out there to complete the test as per the instructions of the Ministry of Health."
He said he hadn't met criteria for a test himself.
"I'm very healthy and feeling very good about things."
Masks are compulsory on flights from Auckland and encouraged elsewhere on the network.
"Customers have been really supportive of both wearing masks and social distancing," he said.
The airline's handling of refunds and credits provoked anger earlier this year from passengers who weren't able to contact it. It has boosted call centre staff and recently rolled out an online tool for passengers to manage their flights in credit.
Foran said yesterday and this morning the wait time was down to about three minutes at the call centre.
The airline will report its full-year result on August 27.
Advice to passengers
Air New Zealand has issued the following advice for customers who have flights booked on or before August 27:
• If you do not intend to fly, please opt in for a credit using the online booking tool.
• If your flight is cancelled and you are an essential worker needing to fly in or out of Auckland, there will be limited flights operating. Please phone the Contact Centre to re-book your flight free-of-charge.
• If you are unable to manage your booking online and you are flying within the next 48 hours, please phone the Contact Centre.
• If the date of your departure passes, we will still honour your booking. You can either change the date free-of-charge or opt-in for a credit if you don't know when you want to travel next.
• For bookings made with a travel agent, including online booking agents, you will need to refer to your original booking agent to manage your booking or to claim a credit note.
