Air New Zealand in the red

Press, 2 September 1981, Page 1

Air New Zealand in the red

earnings were $374.9M compared with $307.8M in 197980. The revenue from domestic services was 5176.7 M ($145.8M).

The divisions’ respective expenditures were 5408.3 M ($318.9M) and SIC6.BM (5150.6 M

While the number of international passengers showed a small increase — up by 41.200 to 1.006.225 - the airline carried 200,000 fewer passengers on its internal services. This total fell from 2.4 million in 1979-80 to 2.2 million last year.

The airline’s chairman. Mr C. W. Mace, described the year under review as the "most traumatic in the airline’s experience. The final loss was above predictions and its impact, he said, was of particular concern at a time when the airline was

undergoing a big re-equip-ping programme. Mr Mace said the findings of the Royal Commission into the Mount Erebus crash, although released after the end of the financial year, had had a marked effect on the company. "The ’ extent of its longterm impact. while impossible to predict, could undoubtedly be serious." he said.

He said that the airline could lose even more money during the current year.

“While this is a matter of serious concern ... the initiatives taken in recent months will provide the platform for a concerted effort which is expected to position the airline towards an improved performance in 1982-83." he said.

In a statement through the

Press Association. Mr Mace said that two-thirds of Air New Zealand's costs were beyond its control.

Although the airline was working on improving the use of its fleet, trimming staff, and imposing tighter controls on costs, "such interests are quite unlikely in themselves to be sufficient to deal with the full degree of the problems facing us." Wage claims would be an important factor in the coming years and the airline would seek to reduce the “burden" imposed on it by high levels of airport dues inside and outside New Zealand.

Forecasting the dropping of some unspecified domestic routes. Mr Mace said some changes were “inevitable." It would be as unpalatable to the airline as to passen-

gers using those routes, but Air New Zealand had to accept a responsibility for profitable working in the long-term and rationalisation was a fact of economic life. Mr Mace said the trading losses had arisen from both the domestic and international sections of Air New Zealand's operations. The decline of the value of the New Zealand dollar, particularly against the United States dollar, also contributed significantly to the loss. When the impact of rising fuel prices was added to the continuing drop in the value of the dollar, every 1 per cent decline against the United States dollar amounted to a net adverse effect of SIM in a year in the airline's trading. The airline’s recovery programme included cost reduc-

tions. tare and rate increases. and a concentration on routes with the greatest market potential. “From such a base. Air New Zealand must and will progress in developing its plans for future success." Mr Mace said. In spite of its loss, the airline still made a big contribution to foreign exchange earnings — SI26M. The airline's chief executive, Mr John Wisdom, said last evening that the. company was considering implementing cost-cutting measures “of a magnitude probably never before contemplated in New Zealand.” He said that the public might consider the cuts unpalatable. but he hoped they could be accomplished with "the full co-operation of staff.