Air New Zealand has made the hard decision to stand down its entire Australia-based sales team until at least the end of May in hopes of preserving as many jobs as possible in the longterm. Around 50 employees are affected.
It comes after the COVID-19 pandemic saw Air New Zealand forced to cut its international network by 95 per cent.
In Australia, they have transitioned from an airline that operated a significant number of international flights to a minimal trans-Tasman service to enable essential travel and to keep air freight moving.
During the stand-down, employees will be able to draw down on annual and long service leave.
Unfortunately, periods of leave without pay for some employees are inevitable.
Air New Zealand’s Regional General Manager Australia Kathryn Robertson said the kiwi carrier was firmly “focused on supporting our people through this exceptionally challenging time for the travel industry”.
Air New Zealand’s Chief Executive Officer Greg Foran sent an email to all Air New Zealand employees last night explaining the difficult situation.
“Air New Zealand will begin the painful process of materially reducing its workforce from this week as the severe economic impact of COVID-19 hits our airline,” he said.
Explaining that Air New Zealand is an expensive business to run with operating costs in the billions.
“We are no different to a household. We have outgoings like debt repayments, utilities bills, lease payments (in our case planes not cars) etc… and we need income (or as we call it – revenue) to cover all our bills.”
Greg Foran
“Before COVID-19 came along and wiped out global air travel, we had annual revenue of around $5.8 billion”.
“After paying all our bills, that saw us end the last financial year making a profit of $374m. And we had over a billion dollars in the bank, which was our version of the rainy-day account in case an unexpected event hit our business”.
“Unfortunately, COVID-19 has seen us go from having revenue of $5.8 billion to what is shaping up to be less than $500 million annually based on the current booking patterns we are seeing”.
“That’s right – a drop of more than $5 billion dollars. This has the potential to be catastrophic for our business unless we take some decisive action”.
He went on to say that the only way they will see an improvement in that revenue estimate this calendar year is if Kiwis embrace domestic travel after the Level Four Alert is lifted.
“The harsh reality is that most countries will take a cautious approach to allowing international tourism in the next year, New Zealand included”.
International tourism flows make up two-thirds of Air New Zealand’s revenue.
“In that light, it is clear the Air New Zealand which emerges from COVID-19 is a much smaller airline and could take years to get back to its former size,” he said.
“Therefore, we are planning to be a domestic airline with limited international services to keep supply lines open for the foreseeable future”.
Sadly, Greg expects 3500 roles will be affected in coming months.
“No areas will be immune whether it is our most senior leaders through to new joiners. The situation we find ourselves in is nobody’s fault,” he said.
“These are certainly unprecedented and challenging days,” he concluded.