Smoother ride forecast for Air N.Z.

Press, 22 October 1980, Page 1

Smoother ride forecast for Air N.Z.

PA Wellington ; Air New Zealand’s bumpy times are likely to continue for the next two years, but then the seat-belts” sign might be switched off, says tteairline’s chief executive, Mr M. R. Davis.

“It is true/ve have been having a pretty difficult time with sothe horrendous problems, including" the Mount Erebus crash, the . DCIO groundings, fare iny creases and fuel cost escalations — but I can see down the line that we are going to come out of this,” i he said yesterday. . ? Mr Davis, speaking in Well lingtoh to a gathering of editors from central New Zealand . newspapers, - forecast that the airline might return to profitability about ■- the end of the 1983 financial year. ; ■’ • ■' ; “Only two airlines, that I know of are not showing i losses in aviation enter-, prises alone,” he said. "Some could be making a

Mr Davis said. Landing charges, fuel prices, and inflation alone as reflected in wages and salaries, brought an increase of $56 million a year since the merger just over two years ago. The steady devaluation in the strength of the New Zealand dollar had also been a factor. A report on the merger to be. produced about the end of the month would show that, since it came into effect the “total product” measured in capacity tonne miles had increased 27 per cent while staff numbers had increased just under 2 per cent. Because of increased use. of aircraft it had been necessary to increase crew numbers. “For each DCIO,

pected to be delivered on May 12, 1981, and the next two in June. No definite sale of any of the fleet of DCIO aircraft had been made, but negotiations were continuing with three airlines. “We are relatively hopeful that we will dispose of the first of the DClOs in the middle of next year,” Mr Davis said. “In the international sphere, things are violently competitive.” Air New Zealand, however, still had the biggest passenger loadings of any international airlines .landing in New Zealand. “There have been some criticisms of recent performances by the com-

, small profit with their peripherals such as hotels, but ‘ not many.” For the same volume of fuel, Air New Zealand was now paying $9O million a • year more than American companies and $4O million more than companies in Australia, he said. More ln-> creases were inevitable. Short of a big Middle East conflagration, it was expected that O.P.E.C. fuel prices would increase at a rate just ahead of the inflation rate in the United States. This; could mean

pany, but I can say that 98 per cent of our people on the ground and in the air are very good ambassadors for the company and New Zealand.” Mr Davis said he be* lieved there was still room for improvement, but it was heartening that in the last few weeks the number of messages he had received . complimenting the company on its service had far outweighed the number of complaints. Mr Davis was non-com-mittal about the prospects of the Skybus scheme which was being promoted as a direct competitor on domestic routes. “If we were able to do what the promoters are talking about and pick the eyes out of the service and run on the trunk routes only at set times. I am sure we could also lower our fares. They have not got permission yet.” . ■? Mr Davis said, however, that the Skybus proposal to use DCB aircraft was ihteresting. “We have found that the DCB is 28 per cent less fuel-efficient than the DCIO on long haul and even less efficient on the short haul compared with the 737.”

that by I§9o— “in dollars of the day” — fuel could cost as much as .$4.50 a gallon. Mr Davis thought, however, that there was little likelihood of a recurrence of "the hump,” the period in which fuel costs trebled within 18 months. ■ . *T am picking an upturn In activity in the United ,-States in the first quarter of 1981, but it might not < be until the end of the 1983 “.■financial year that we experience the same thing • here,” he said. Three main factors had hit the ‘ airline since the, merger/between the old Air New Zealand and '■ the' Nat-:' '■ ional Airways Corporation.'

six • 5 crews are needed. Where production goes up, staff strength must go up. We will not see the full benefits of the merger until ,1982-83, but already they j-have been extensive,” Mr Davis said. ~ The company’s planning /.for the arrival of the first of the five Boeing 747 jumbos on order, was well advanced, the first ■ ex-