Coronavirus: The shocking numbers that reveal how tough Air NZ's fight for survival is

Pilots are used to planning for squalls, strong headwinds or severe turbulence. But the COVID-19 pandemic is so massive, if it were a storm, pilots wouldn't even bother turning on the engines.

An email sent last night by Air New Zealand's CEO leaves no room for misinterpretation, reiterating the company is entering "unprecedented and challenging days" with cold, hard facts that show how our national airline is at stake.

Management at Air NZ has begun the "painful process" of downsizing its workforce while preparing to operate a drastically reduced schedule, saying it could take years to get back to its former size.

The numbers are sobering.

Coronavirus: The shocking numbers that reveal how tough Air NZ's fight for survival is
Photo credit: Newshub.

Air NZ now expects it will bring in revenue of just $500 million in the year ahead. That's down about 90 percent from around $5.8 billion last year.

It's gone from operating multiple daily flights to Asia, Australia and North America, where it was also soon to launch an historic non-stop flight to New York. Now its services are limited to a handful of services a week for essential travellers, repatriating Kiwis and freight.

Air NZ's cutbacks:

  • The airline has cut 95 percent of its flights
  • It's domestic network carried just 670 people on Saturday, down from carrying 48,000 per day
  • Revenue is likely to drop from $5.8 billion to be less than $500 million 
  • More than 30 percent of Air NZ's revenue comes from international tourism 
  • The domestic network usually serves 1.5 million tourists a year
  • Up until the COVID-19 crisis, Air NZ employed 12,500 people in total with a monthly wage bill of $110 million 
Drop in Air NZ's capacity represented by seats on an aircraft.
Drop in Air NZ's capacity represented by seats on an aircraft. Photo credit: Newshub.

CEO Greg Foran said unless major changes were made soon, COVID-19 had the potential to be catastrophic for the company. 

Air NZ is working with unions to reduce its staff numbers of 12,500 people by about 30 percent or 3750 jobs within the next 12 months.

Currently, the airline has a monthly wage bill of $110 million.

Over the years it had built up a cash reserve of $960 million to help the company get through any unforeseen crisis, but no amount of planning would have prepared the company for the current economic climate.

It also has access to a $900 million loan from the New Zealand Government, but that won't be nearly enough to fix the problem - it's more of a buffer to help the company through the next 12 months.

Foran says the loan has "more than double current interest rates for a household mortgage" and has to be repaid.

"Burdening our airline with massive debt would significantly lessen our ability to compete with airlines emerging from COVID-19. Unfortunate as it is, our revenue and expenses forecasting indicate that a large scale reduction of the workforce must occur on top of all our other actions," he said. 

"These are necessary measures to ensure our nation retains an airline, albeit a smaller one.

"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."

Domestic travel will have a massive part to play in rebuilding the airline when COVID-19 alert level 4 restrictions are lifted.

"The harsh reality is that most countries will take a cautious approach to allowing international tourism in the next year, New Zealand included," said Foran.

A rich history:

It's been 80 years since Air NZ first took to the skies over Aotearoa - its anniversary is just weeks away.

Over that time, it's taken New Zealand with it as it began to explore more and more destinations around the world.

From being 'The world's warmest welcome' to 'The pride of the Pacific', Air NZ has always punched above its weight internationally. It's a brand that's gained a following around the world, including fans who have never even visited the country or flown with the airline.

One thing that's always stood out about the airline is how passionate and proud its employees are about their jobs and who they work for.

There's little doubt Air NZ has what it takes to recover once the coronavirus crisis is behind us and it absolutely must if New Zealand is going to remain connected to the world.

No matter how big or small, getting there is everything.

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