Air New Zealand announces radical changes, including the launch of a new line to Seoul, as a result of a company-wide review

Air New Zealand is making significant changes in its mode of operation as a result of a company-wide review.

The changes include a new service in South Korea, free wifi on international flights and a revamped economic product.

The new direct service between Auckland and Seoul will be launched at the end of November with three flights a week to Incheon International Airport in Seoul from 23 November and up to five flights a week during the peak holiday period from late December to mid-February.

Frequency on its Auckland-Taipei services will increase starting in November and Auckland-Chicago services starting in December.

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Aircraft capital expenditures of approximately $ 750 million will be carried forward so that incremental capacity better reflects slower growth in demand.

Air New Zealand will also delay spending, which would result in cost savings of more than $ 50 million a year, he added.

The airline announced the review after downgrading its earnings guidance for fiscal 2019, with pre-tax earnings ranging from $ 340 million to $ 400 million for the year to June 30.

Air New Zealand's chief executive, Christopher Luxon, said the results announced Thursday would have a positive impact on revenue growth, capital efficiency, operating costs and the experience of the company. customer journey in 2020 and beyond.

The changes will redirect activities to ensure a return to earnings growth in a lower growth environment, said Luxon.

Air New Zealand has revised the expected growth of its network from 5 to 7% on average over the next three years to 3 to 5%.

A new product offering, more spacious and more economical, would be deployed on its long-haul fleet from the middle of 2020 and free wifi would be offered from Thursday for all activated international aircraft.

An upgraded version of its existing Business Premier seat will be installed on its large fleet by the end of 2019 and deployment is expected to be completed by December 2020.

As part of the airline's modernization program, nine network shows will be upgraded over the next two years at a cost of about $ 50 million.

Luxon said it was confident in the company's ability to adjust its operations successfully to reflect the changing market conditions.

"Our confidence in Air New Zealand's long-term strategy, customer proposition and financial performance remains strong," said Luxon.

"The measures we are taking today will provide a solid foundation for future earnings growth.

"We are deferring aircraft deliveries and related capital expenditures, adjusting our capacity growth plans and promoting sustainable efficiencies across our cost base to better reflect slower growth in market demand. "

Luxon said that Air New Zealand's main goal was to ensure that its international aircraft were directed to very profitable routes.

"On this basis, we are making additional efforts to improve the performance of certain routes that we believe do not realize their full potential, while refocusing our badets on routes beyond expectations."

SEOUL ROUTE

Tickets for the new Seoul service will soon be on sale once regulatory approvals and a landing slot have been confirmed.

Currently, Korean Air is the only airline serving Korea and New Zealand.

Air New Zealand operated Auckland flights to Seoul in the mid-1990s, but suspended service when the request was transferred elsewhere.

The service will be operated by a Boeing 787-9 Dreamliner with a flight duration of approximately 12 hours heading north and 11 hours heading south.

The proposed schedule would depart from Auckland at noon and arrive in Seoul around 8 pm on Monday, Thursday and Saturday (and Wednesday and Sunday in high season).

Flights departing from Seoul would depart at 21:45 and land at Auckland at 13:00.

Air New Zealand's revenue manager Cam Wallace said that charter trips from South Korea to New Zealand have increased dramatically in recent years.

"This new service will also help bring together the more than 40,000 Koreans currently living in New Zealand with their friends and family in their home country."

Seoul, a city of 10 million inhabitants, was a dynamic destination that he hoped to add to New Zealand travelers.

REPORT

Delivery of three A321 neo devices to be operated on the national network will be postponed by one year.

The delivery of a designated A320 neo aircraft for trans-Tasman services will be deferred for two years.

The delivery of two long-haul aircraft will be deferred for at least four years.

The amendments would reduce the level of investment spending expected between fiscal years 2020 and 2023.

No changes are expected for the delivery date of the 14th Dreamliner 787-9 of the airline, which will be rented from October.