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Air NZ reaps big benefits from senior executive pay cuts

July 18, 2014 Aviation, Headline News 1 Comment Email Email

egtmedia59Senior executives at Air New Zealand took hefty pay cuts to encourage lower level staff to restrain wage increases, it has been revealed. 

To make a pay freeze for lower-level employees more palatable in the heavily unionised New Zealand airline, top executives took a 20% pay cut. Middle management took a 10% pay cut.

The strategy worked, and within two years the Kiwi airline was able to pay a bonus to its entire staff.

The story emerges in an interview with Air New Zealand chief executive Ralph Norris published in the Sydney Moring Herald.

The return to profitability sparked by the management pay cuts gave the management team and board, led by then chairman John Palmer, the confidence to place a large order for new long-haul aircraft, the paper reports. Types ordered included the B787-9, the stretch version of the Dreamliner. The first plane arrived in Auckland a week ago and will soon go into service on international routes.

As the SMH article points out, Air New Zealand is now the most profitable airline in Australasia, expecting to notch up a full-year pre-tax profit of at least NZD 300 million (AUD 282 million) in August.

Perhaps cruelly, the article contrasts that situation with the pre-tax loss of AUD 731 million facing Air New Zealand’s once-stronger rival, Qantas.

Written by : Peter Needham

Currently there is "1 comment" on this Article:

  1. Liza George says:

    Alan Joyce should take note of John Palmer’s actions and take a pay cut. Qantas shareholders should insist he do so.

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