Date: June 20 2012
AIR New Zealand has signalled that it will not retreat from flying on long-haul international routes under the leadership of its chief executive-in-waiting, Christopher Luxon, despite the difficulty it has to turn a profit on them because of high fuel prices and intense competition.
Facing the same challenges as Qantas, the airline yesterday named Mr Luxon, head of its international division, as the successor to its highly regarded boss, Rob Fyfe.
The former Unilever executive, who joined the airline in May last year, will take over from Mr Fyfe at the end of December. He edged out Bruce Parton, the boss of Air New Zealand's short-haul operations, for the top job, making it likely the latter will reconsider his future under a rejigged management team.
The New Zealand-born Mr Luxon has been heavily involved in attempting to turn around the fortunes of the airline's long-haul operations, which at its worst last year was losing $NZ1 million ($A782,000) a week, and he is expected to roll out similar changes elsewhere in the company.
These include attempts to boost ancillary revenues, using its customer loyalty program more effectively and forming closer alliances with other airlines.
Mr Luxon, 41, said yesterday that he believed the long-haul business had a profitable future, citing the ''very strong'' performance of its routes to North America. Air New Zealand is banking on a $NZ110 million profit improvement from the international division by 2015.
''For me, I see a future that is all about growth for us as an airline,'' he said, citing the emergence of a large middle class in the Asia-Pacific region.
The Kiwi flag carrier received a boost last month when Qantas stopped flying between Auckland and Los Angeles because of its losses on that route. It hopes to pick up a large portion of the traffic, which it estimates is worth about $50 million a year.
United Airlines also recently scrapped plans to fly more fuel-efficient 787 Dreamliner aircraft between Houston and Auckland, giving Air New Zealand an extra fillip.
Macquarie Equities analysts said Mr Luxon's time in various roles at Unilever in Australia, Asia and North America should give investors confidence in his managerial and operational expertise.
''While the market may view Luxon's lack of airline operational experience as a potential concern … we would point out the history of success Air New Zealand have had with other CEOs who had little industry experience, including Ralph Norris and, to some extent, Rob Fyfe,'' they said.
Air New Zealand, which has a 20 per cent stake in Virgin Australia, reiterated yesterday that it did not plan to boost its holdings further and also ruled out more job cuts.
Mr Fyfe, who announced in January his plans to step down, said he was yet to make a decision about what he would do when he leaves the airline.
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