Air New Zealand announces its Strategy for Growth

Air New Zealand is about to go through a period of significant and exciting change, CEO and Managing Director Ralph Norris said today.

Mr Norris yesterday unveiled the company's new four-year strategic business plan to his management team.

"To ensure our ongoing success we must be world-class in everything we do. Our customers demand nothing less," Mr Norris said.

"Last week the Board endorsed a strategy that I firmly believe will see us continue to improve on the excellent work that has been done to rebuild our company over the past two years. Initiatives like Domestic Express, Tasman Express, Self-Check-In kiosks and the purchase of new A320 aircraft are only a taste of what is to come.

"For much of this year, many staff from across Air New Zealand have been working hard to look at new ways to improve the way the airline runs its operations, treats customers and rewards employees. Their work culminated in the development of the strategic business plan."

Mr Norris said it was with great pride and a sense of anticipation that he was now able to share Air New Zealand's future with staff, shareholders and stakeholders.

"The Air New Zealand of the future will operate a range of highly efficient inter-related aviation businesses. Remaining at its heart will be our airlines.

"The core of the strategy is to ensure that Air New Zealand will become the airline of choice when travelling to, from, or within New Zealand. On top of our everyday low fares we will offer a wide range of new initiatives, such as leading edge on line booking facilities, improved frequency, faster check in and boarding, improved border processing on international flights, better recognition of loyalty and new in-flight offerings.

"Existing uniforms will be replaced with a more contemporary stylish look and be reflective of our Kiwi culture in support of our desire to create a uniquely Kiwi travel experience."

Mr Norris said Air New Zealand would be not only the first choice for travellers. It would become the first choice in the South Pacific for engineering work.

"We have the best engineers and the best facilities in this part of the world. Investment in training and infrastructure will further cement the world-class reputation of the ANZES team."

Mr Norris said the new four-year strategy would gradually deliver significant savings, which are expected to total $245-million annually once it is fully implemented in 2007.

"On top of these savings we are expecting a significant lift in revenue, as we move to seize market opportunities."

Mr Norris said the savings would come from all areas of operations, as Air New Zealand became more efficient and utilised new technology. A reduction in labour costs would also contribute to the savings.

"Our workforce currently totals around 10,000 staff and over the four years of the strategy we expect this to reduce by 15%. The majority of the reduction will be achieved through attrition. The Board and I are committed to ensuring that there are minimal redundancies over the next four years, a result we should be able to achieve given the fact that at least 10% of employees leave us each year through attrition to explore new opportunities or move into retirement," he said.

Mr Norris said that to ensure Air New Zealand was well placed to face the challenges of the future and to capitalise on opportunities, it was essential that the company had strong and dynamic leadership.

"This has never been more important than in the highly competitive environment of the airline industry today, both in this region and globally.

"Therefore, I have implemented a new management structure that I believe realigns our business to ensure we achieve our potential. Each member of my new management team is aware of the role their division will have to play in ensuring we can be agile and nimble when confronted with competitive pressures. They are also acutely aware, as I am, of the crucial role our staff play in making this business a success.

"The Air New Zealand of the future will enable staff to acquire a new range of skills, use them across different areas of the business and be better rewarded for outstanding performance."

Mr Norris said that Air New Zealand's four-year strategy and the expected benefits that will flow from it are part of the Company's response to increased competition.

"The proposed Qantas strategic alliance is consistent with this strategy and remains an extremely important response to the competitive market and to the long term sustainability of Air New Zealand. The underlying dynamics of the aviation industry and the benefits that will flow from an alliance with Qantas remain unchanged," said Mr Norris.

Air New Zealand Chairman John Palmer said the Board was committed to and supportive of the strategy that would take the company into the future.

"Many staff across the business have made significant contributions to this strategy, which I'm sure will deliver our customers a uniquely Kiwi experience whether they are flying on our planes or having equipment serviced by engineering staff," Mr Palmer said.

"The strategy firmly recognises that customers want good quality service and  value for money. To deliver this our business will play to its strengths. We will be innovative, efficient, agile and friendly. Air New Zealand will continue to be everything our staff have made it - world class."