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Summary
- National carriers stepped on a wrong nerve with issuing performance bonuses to its executives amid massive layoffs and pay cuts.
- The workers are angry and feel the airline is not standing up for its workforce; however, its internal program talks about rebuilding and supporting staff while taking the best care of its customers.
- The rights issue is not going to be easily ignored by the workers as they seem to be deeply hurt
New Zealand's beloved airline Air New Zealand is in the middle of yet another controversy. Since the coronavirus pandemic started, Air NZ is seeing worse days than the good ones. The airline has been called out as "tone-deaf" as it recently issued millions of dollars’ worth of share options to its senior executives. Air New Zealand Limited (NZX:AIR) shares are currently trading at NZ$1.610 as on Tuesday 10 Nov 2020 3:17 PM.
On one side, AIR workers are facing layoffs and pay cuts from the airline, on the other side it has issued performance rights worth more than NZ$2 million to its chief executive, Greg Foran, last week. Performance rights of lesser value are also issued to six more executives including former executive Cam Wallace.
Though the execution of these options is based on the company’s share price performance taking long term perspective and is payable in 2023. This has flown a wave of anger among the aviation workers, and per the trade union Etū statement.
Union head of aviation named Savage expressed that union members were rejecting pay increases and they did not even collect contractual performance bonus to help Air New Zealand save money. But on the contrary, the airline is issuing a considerable chunk of funds to its executives during such crisis times.
Image Source : © Kalkine Group 2020
Tone-deaf response from the airline?
To survive the ongoing uncertain situation, Air NZ slashed costs across the business, which includes laying off more than 4000 staff members. Last month when the national carrier confirmed another batch of 385 international cabin crew to be made redundant, it brought an appalling situation to Air NZ.
AIR has been drawing down Government loan and have received more than NZ$130 million in wage and freight subsidies.
The union says the trust between the cabin crew and airline is the lowest right now. Before this, the airline had furloughed 550 international cabin crew who did not work since July as the country's border restrictions continue to damage the passenger demand.
The workers labelled the airline's decision to issue performance bonuses as "tone-deaf". Savage said that the workers are already suffering from such harsh conditions and the announcement is coming as it's rubbing salt into their already painful wounds. The workers are now upset as the crew members are getting pulled down.
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Recent losses are disheartening:
Air New Zealand reported a loss of NZ$454 million for the year to June 30. The national carrier posted such loss for the first time since 2002. The financial impact of coronavirus is visible on a company's balance sheet. Its shares have reached half in value since the beginning of the year.
In order to gain some strength to move forward, the airline negotiated a NZ$900 million COVID-19 support loan from the Crown. Air NZ is a 52 per cent government-owned airline. Savage expressed that the union is planning to raise the issue of a performance bonus to the Finance Minister Grant Robertson.
He believes that the public money is being spent on filling the pockets of senior management as the airline did draw government loans to survive the pandemic. Savage commented that the share options would not be able to rebuild the company's performance. It would also not reinforce the view of union members who believe that the company requires a total change of strategy.
Air New Zealand's board approved the share options of directors on October 8. The rights are subject to certain performance conditions to meet on or after September 15, 2023, for the executives.
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