Air NZ expectations letter? Return to sender
Robertson needs to reflect on Govt failings before preaching to airline
Finance Minister Grant Robertson should hold the mirror up to his own Government’s face before publicly preaching to the Air New Zealand board on how it should operate.
The Government’s own performance across a raft of key indicators is wanting.
It has hardly been a success story when it comes to managing and delivering on the major issues affecting New Zealanders. Take a wander around the back streets of any major city or town in New Zealand and the misery is writ large. People crushed into over-crowded houses struggling to pay the rent let alone save a deposit for a dwelling of their own; a total inability to get a major public sector building programme in place to accommodate those who, short of a major housing market correction, will never be able to afford to buy, and child poverty and mental health remaining as enduring challenges.
Robertson has borrowed large to sustain New Zealand through the Covid pandemic. But with problems on the delivery front remaining, his attention would be better turned towards the Government’s performance itself rather than beating up on a company which has done a pretty good job in current circumstances.
His “enduring letter of expectations” to Air NZ chairwoman Dame Therese Walsh has not been favourably received in the business community.
Businesspeople generally think well of Robertson.
They tend to cut the Government some public slack as they are well aware from their own experience that trying to manage finances and the wellbeing of staff in pandemic conditions is wearying.
But they also think well of the airline which — pre-Covid — had been an international standout and they believe the recapitalisation should have happened months ago.
Walsh will keep up a public facade as she must.
But it is obvious that directors have been up against the wall battling — ever so graciously — with a shareholding minister who delayed the much-needed capital raise last year on specious grounds, instead saddling the company with a slowdragging anchor of debt at usurious interest rates.
Many companies went to the market early to raise capital when the impact of the Covid-19 pandemic hurt their operations.
Auckland Airport sought up to $1.2 billion to reinforce its balance sheet and ensure it remained well capitalised during this period of strict border controls and greatly reduced passenger numbers, with the aim of ensuring it is well positioned for a post-Covid-19 era.
It begs credulity that Robertson would not allow Air NZ to follow suit.
There was considerable speculation last year that Robertson was delaying the recapitalisation out of a concern that NZ First may oppose aspects of it. NZ First’s Shane Jones had been critical of the airline.
But this year the speculation has turned to whether Labour does itself have a game-plan to increase its 52 per cent holding further.
This speculation is not helping perceptions of either Robertson or Air NZ.
The Finance Minister is a close enough observer of Air New Zealand’s performance, since Labour came to power in 2017 courtesy of former NZ First Leader Winston Peters’ choosing, to have formed some strong views, not all of them laudatory.
These have been expressed behind closed doors — and openly when he was sufficiently riled by Air NZ Greg Foran’s apparent tardiness in his eyes in dealing with the Saudi engines affair.
“Letters of expectation” are not out of the ordinary for this or indeed the prior Government. But the contents of the Walsh letter betray an element of quite unnecessary sanctimony. What is so wrong with the board’s culture and skills that he wants it realigned to meet his expanded laundry list of “enduring expectations”?
Senior businesspeople — particularly those who may be in scope for directorships of Crown companies and entities, or are contemplating future roles on listed gentailers like Mercury and Meridian Energy — will want assurances that the shareholder will give them support when trouble strikes.
The Air New Zealand directors were not brought down in the last shower.
Headed by board chair Walsh they include Jan Dawson (deputy chair and also chair of Westpac NZ), Jonathan Mason (also Vector chair), Ron Jager (former Shell NZ head), entrepreneur Linda Jenkinson, Laurissa Cooney (Chair of Tourism Bay of Plenty), Larry De Shon (former head of Avis Budget Group) and Dean Bracewell (former chief of Freightways). The latter three have been on the board for less than two years.
Several of those directors have been on the board for some time now.
Dawson’s departure has already been signalled. The long-serving Dawson joined the Air NZ board in
2011 and will leave in September when the capital raise is expected to be finalised. While Mason joined in
2014, he is a former Fonterra chief financial officer and is the only existing board member outside of Walsh herself with the financial skills set to replace Dawson as chair of the audit committee.
Walsh has been road testing the names of potential directors with Robertson for some time now.
There has been a significant change in the tone and substance of these letters.
In July 2012, former Finance Minister Bill English and then State Services Minister Jonathan Coleman issued a significant letter of expectations to statutory Crown entities emphasising they wanted to ensure a “no surprises” policy was maintained. Cabinet ministers were to be given advance warning of any problematic issues likely to spill into the public arena. There was also a strong emphasis on delivering value for money.
In 2019 that changed when new letters were issued requiring such entities to place greater emphasis on the Government’s social and environmental objectives ensuring greater diversity in their organisations, building M¯aori capability and delivering on wellbeing.
This latest letter from Robertson to Air NZ is unnecessary.
It would have been so much simpler to issue a letter publicly supporting the airline instead.
This year the speculation has turned to whether Labour does itself have a game-plan to increase its 52 per cent holding further.