Greg Foran was welcomed by Air NZ crew at a powhiri on Monday. Photo / Supplied
Greg Foran was welcomed by Air NZ crew at a powhiri on Monday. Photo / Supplied
Editorial
EDITORIAL
New Air New Zealand chief executive Greg Foran has started work the week that the airline industry faces a looming crisis in the coronavirus outbreak.
On the day he started, the airline pulled out of its Shanghai service until the end of March and dispatched a plane and acrew on a government rescue mission to Wuhan, the epicentre of the virus. Thirty carriers have dumped a total of 25,000 flights to China in the past week in response to a collapse in demand and pressure from those worried about the potential to spread the of the virus even wider.
At present, other international networks are unaffected but, if anxiety about travel and extra screening and border hassles was to escalate, this could make Foran's early tenure extremely challenging.
While Air New Zealand's Auckland to Shanghai flight has struggled against the big mainland Chinese airlines, it would suffer gravely from a more general contagion of fear, no matter whether it is connected to the science.
Air New Zealand's international network primarily carries leisure travellers whose journeys are discretionary. Nobody has to come here for a holiday.
Investors are worried, with Air NZ's share price fall of 10 per cent in the last three weeks mirroring that of other airlines.
When Foran was finishing up as head of Walmart in the US last year and imagining what was possible for the airline, the threat of a global pandemic in his first week on the job was probably not front of mind.
But fortunately for Foran, his new company is in sound financial shape; has a talented executive team; and an engaged workforce of more than 12,000. Many are highly committed - evidenced by the airline having to turn away dozens of volunteers for the Wuhan rescue flight.
A passenger receives a temperature check before taking a flight from Tokyo. Photo / Getty Images
Airlines are also getting a break due to one consequence of the economic shock in China with a 20 per cent fall in oil prices, especially welcome for Air NZ where fuel can be a third of costs.
And of course the coronavirus threat and fear may ebb almost as quickly as it appeared and the travel industry will bounce back quickly.
That will turn attention on other challenges for Air NZ: Restraining costs while maintaining quality; growth or consolidation; and how it serves the regions. The regional network issue will be of high importance in election year as services and prices can become a big, bouncy political football.
Right now, Foran is eschewing media appearances and rightly rolling up his sleeves to take a deep dive into learning about the complex business he is new to. In the 1980s, another chief executive, Norm Geary, told his PR people to handle the news while he ran the airline. It worked then - there was a spectacular financial turnaround.
Air NZ is far from the parlous financial state it was then but what Foran discovers about the airline and his views on what to do next will be highly anticipated.
And hopefully without the threat of a pandemic when he delivers them.
