Air New Zealand (ANZ) has painted a stark picture of the next two years, expecting to be just 70% of its former size in 2022, with long-haul travel a distant prospect for 2021.

In a letter to employees, ANZ chief executive Greg Foran expects that the carrier will fly just 13 million passengers in 2022, compared with 18 million annually before the coronavirus pandemic. 

Cost cutting is a major focus, and 4,000 employees have already departed the company.

“We have had to start radically overhauling our cost base,” he says.

“From grounding our [Boeing] 777 fleet to deferring expenditure on new aircraft, hangars and parking; seeking savings across contracts in our supply chain and leases for aircraft; Executive roles, office space and even company vehicles. We are leaving no stone unturned. Our wage bill is down by a third now but our revenue has fallen by more than two thirds. We need to balance the scales further.”

The company hopes to cut an additional NZ$150 million ($97.7 million) from its wage bill. These will be achieved through leave without pay, reduced hours, job sharing, and voluntary exits. Redundancies are on the table as a last option.

As for international travel, Foran believes that initially this will only cover trans-Tasman routes to Australia, as well as to Pacific island nations. He paints a gloomy picture for long-haul flying.

“We are not factoring a return to long-haul flying of any note until next year. We believe that until there is a vaccine, effective treatment or elimination of the disease in key markets, the New Zealand Government will not fully open its borders for growth in long-haul air travel.”

He adds that the pandemic will permanently change the industry. “This event is not a hiccup; very few airlines will return to the former ways of working. The survivors will be more focused, lower cost and provide better customer service.”