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 says the airline's executives had from last week been preparing for the scenario that has played out with the raising of alert levels throughout the country.
Shifting to level 3 in Auckland and level 2 throughout the rest of the country delivers ahit to the airline which had been building towards 80 per cent of pre-Covid levels of domestic flying but now faces at least three days of massive disruption.
The airline had not got any advance notice of Prime Minister Jacinda Ardern's announcement last night but had done detailed planning for the return to stringent restrictions until midnight Friday, and possible longer.
"We had prepared for the fact Auckland could go into level 3 and what we're doing now is enacting the plans we'd devised. We were simply reading the tea leaves as everybody else was," Foran told the Herald.
"I don't think the country is completely surprised by this. I think we were well positioned a week ago. I think people who read what's been happening globally will know that we're not the only country that has had this happen."
Foran said the return up the alert level scale was a blow but he believed people will get back to the "new abnormal" quite quickly.
The airline had made masks mandatory on domestic planes out of Auckland. Passengers could use their own or they would be provided by the airline. The airline had a good supply of them into next month and more were on order.
Level 3 restrictions meant only essential workers and some with special exemptions could fly to and from Auckland and that there would be social distancing on planes throughout the rest of the country.
An Air NZ flight leaves Queenstown. Domestic operations had bounced back strongly. Photo / Mike Scott
"It's going to be reasonably significant because at any one time we've probably got 35,000 people travelling in a week and a lot of those people will now be calling call centres or changing flights and need to get home," he said
Each passenger had their own particular story and the network over the next few days would come under pressure. If the restrictions were extended on Friday, the network may look significantly different again.
During the nationwide level 4 lockdown earlier this year only skeleton services were in place but for now the airline was keeping its current schedule operating.
It was a complicated exercise to unwind the network.
"Changing things at the drop of the hat is not a good thing to do. At this stage we're going to run the network for the next few days, we think that is the right thing to do in terms of moving people."
It was not known how many passengers would be no-shows and opt not to fly even though they have tickets.
Foran said at around 8.30am on Wednesday morning there were 450 people waiting to speak to call centre staff. The airline is offering credits to those whose flights are affected and they could now manage this online after a clogged system lead to customer fury earlier this year.
"I'm sorry this has happened - it puts a lot of our customers in a tough position but it's also tough for our staff too," he said.
"We're a pretty resilient bunch and most people would have woken up this morning and said 'right, ok we've been here before'."
Foran said that had helped with planning for the alert level lift.
"We don't have to dust them off because they didn't get time to get dusty. People know what they have to do and we'll get through this."
Unlike many other airlines around the world, Air NZ's domestic business had rebuilt and this had put it in a good position to deal with the current restrictions.
Foran started in the chief executive's role as the pandemic struck and slammed the aviation sector earlier this year.
He said around the world people appeared to be getting more used to dealing with Covid-19 and "manage our way around it as opposed to having zero as a number".
It was complex, difficult and people had different views.
There has been pressure to start a travel bubble with the Cook Islands and the latest health setback would be another hurdle to cross.
"I feel that we will work out that - it's our ability to walk and chew gum at the same time as a country - it's not just an Air NZ thing."
The airline faces one of its worst-ever financial results when it reports its full-year result later this month after its half-year net profit slumped by 32 per cent to $101 million.
In late May it said it was expecting one-off costs of between $554m and $694m for the current year ended June, which includes redundancy and restructuring costs, write down in the value of aircraft and losses on fuel hedges.
Foran would not comment on whether it had tapped into a $900m backstop loan from the Government given the proximity to releasing its financial results. In early trading today its share price slid be close to 9 per cent to $1.26. It started the year on $3.05.
