Air New Zealand will have a $3 billion hit to revenues as a result of the Covid 19 crisis and will exit the pandemic as a much smaller operation, said chief executive Greg Foran in an email to staff.
In the email Foran said pre-COVID-19 came the firm had annual revenue of around NZ$5.8 billion, producing profits of NZ$374 million and cash reserves of NZ$1billion.
“Unfortunately, COVID-19 has seen us go from having revenue of NZ$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 NZ$5 billion ($3 billion)dollars,” said Foran. “This has the potential to be catastrophic for our business unless we take some decisive action,” he added.
Foran said that international tourism flows make up two thirds of Air New Zealand’s revenue, who also drove the firm’s domestic business.
“So, that is billions of dollars in ticket sales we won’t be booking and more than 1.5 million tourists who won’t be arriving here to fly on our domestic network.
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.
Therefore, we are planning to be a domestic airline with limited international services to keep supply lines open for the foreseeable future,” said Foran.