Air New Zealand chief executive Greg Foran has announced a voluntary 15 per cent pay cut to his base pay following the airline struggling as a result of coronavirus.
The announcement has the backing of the board and the Air New Zealand executive team will also be extending their salary freeze that has been in place since May 2019.
Greg’s base pay of $1.65million will be reduced by $250,000.
The airline has also decided upon a hiring freeze for all non-critical roles and will offer current staff the option to take unpaid leave in addition to managing annual leave balances.
This follows the announcement that Air New Zealand will be withdrawing the full year 2020 earnings guidance it issued on February 24 and reconfirmed at its interim results announcement on February 27.
The airline states it has taken numerous steps to mitigate the reduced demand for flights following Covid-19, including reducing capacity on its Asia, Tasman and domestic networks, redeploying its fuel efficient 787 Dreamliner fleet to drive operational efficiencies and using tactical pricing to stimulate demand on the impacted sectors.
However, the airline now believes that the financial impact is likely to be more significant than previously estimated and with the situation evolving at such a rapid pace, the airline is not in a position to provide an earnings outlook to the market at this time but will provide an update in due course.
Over the course of the past week the airline has seen additional softness in demand with a decline in bookings across its network. The further spread of Covid-19 to countries outside of China, including New Zealand, has driven a downward shift in demand.
Greg says it is increasingly clear that Covid-19 has created an unprecedented situation and it is difficult to predict future demand patterns.
"We have been continuously monitoring bookings and in recent days have seen a further decline which coincides with media coverage of the spread of Covid-19 to most countries on our network as well as here in New Zealand," says Greg.
In response, the airline has implemented further capacity reductions to its network, which include extending the suspension of its Shanghai service through to the end of April and additional consolidation of services across the Tasman, Pacific Islands and domestic network in March and April.
As a result of these actions, Air New Zealand has reduced total capacity into Asia by 26 percent, and total overall network capacity by approximately 10 percent since the outbreak of Covid-19 started.
Like the vast majority of its industry peers, the airline is also pursuing a range of mitigations in response to the swift decline of demand. These include the deferral of non-urgent capital spend and non-critical business activity across operational and corporate functions.
