Air NZ boss predicts 3750 redundancies

Air New Zealand has changed its stance on expected job losses as a result of a ‘‘bleaker’’ outlook, a union says.

In an email to staff sent on Monday evening, Air New Zealand chief executive Greg Foran said the airline would start the process of materially reducing its workforce this week due to the impact Covid-19 was having.

‘‘Clearly, we will be smaller for some time and we will need fewer staff,’’ Foran said. ‘‘We expect that even in a year’s time we will be at least 30 per cent smaller than we are today.’’

In an earlier email sent on March 16, Foran said the airline’s workforce of 12,500 would reduce by ‘‘up to’’ 30 per cent – equating to about 3750 people.

E tu¯ assistant national secretary Rachel Mackintosh said the change in wording to ‘‘at least 30 per cent’’ reflected a worsening outlook.

‘‘They said that it’s getting bleaker by the day,’’ Mackintosh said.

Foran’s most recent email said the company’s annual revenue was expected to fall from about $5.8 billion to less than $500 million – a 90 per cent reduction – as a result of Covid-19.

‘‘That’s right – a drop of more than $5b. This has the potential to be catastrophic for our business unless we take some decisive action.’’

International tourism made up twothirds of the airline’s revenue and countries were likely to take a ‘‘cautious’’ approach to international tourism over the next year.

The only way revenue would improve in 2020 would be if Kiwis embraced domestic travel after the level four alert was lifted, he said.

‘‘Therefore, we are planning to be a domestic airline with limited international services to keep supply lines open for the foreseeable future.’’

It could take years before Air New Zealand returned to the size it was before Covid-19, he said.

The airline has reduced its international network to 11 routes. Its domestic capacity has been significantly scaled back and is currently accessible to essential workers and freight only.

On March 20 Air New Zealand secured a loan from the Government worth up to $900m. Foran said it was expected the airline would need to begin drawing on that within months because its outgoings were so high – monthly labour costs alone were $110m.

Mackintosh said E tu¯ , which represented 5000 Air New Zealand workers, was calling on the airline to take advantage of the Government’s Covid-19 wage subsidy, which pays companies $585.80 a week for 12 weeks for each full-time employee.

‘‘We’re saying they shouldn’t be going hard and going early,’’ she said.

By taking the subsidy, Air New Zealand could delay redundancies by up to 12 weeks and in that time listen to staff about innovative ways to keep more people employed, she said.

‘‘They have $1b in the bank. They have access to $70m worth of wage subsidy and a $900m taxpayer loan to fall back on. To formally initiate redundancy talks while so many workers are on lockdown at home would be a mistake. It’s just wrong.’’

Air New Zealand had made out as though it was working collaboratively with unions but that was not the case, she said. ‘‘At this point they’ve just decided to be unilateral.’’

Foran said Air New Zealand’s ‘‘largescale reduction’’ of its workforce would begin this week for staff employed outside of New Zealand.