How will Air New Zealand-Saudi Arabia scandal affect the company?

Author
Newstalk ZB / NZ Herald,
Publish Date
Mon, 8 Feb 2021, 5:25PM
(Photo / NZ Herald)
(Photo / NZ Herald)

How will Air New Zealand-Saudi Arabia scandal affect the company?

Author
Newstalk ZB / NZ Herald,
Publish Date
Mon, 8 Feb 2021, 5:25PM

Air New Zealand's relationship with Saudi Arabia is being described as "embarrassing", and there are doubts that the CEO would not have known what was happening. 

It's been revealed Air New Zealand's Gas Turbine's unit was contracted through a third party to do the repairs on two engines and a power turbine module.

This is despite the Saudi military's role in the bloody war in Yemen – a war which has devastated the country and pushed it to the brink of famine.

Once the links between Gas Turbines and the Saudi military were brought to the attention of Air NZ, it apologised and called it an "oversight".

Those ties have already been criticised by Prime Minister Jacinda Ardern and her deputy, Grant Robertson.

Ardern said the national airline's involvement with the Saudi military was "very disappointing" and "does not pass New Zealand's sniff test".

Air New Zealand is 51 per cent owned by the Government.

Ardern has ordered the Ministry of Foreign Affairs and Trade (MFAT) officials to look into the issue.

This morning, Air New Zealand boss Greg Foran said Air NZ's involvement was a case of "poor judgement", but told Newstal ZB top brass did not know about the deal.

"It is also being suggested it was some sort of conspiracy at the very top of Air NZ - that is not the case.

"This is something I found out 10 days ago, and I can assure you we took immediate action as soon as we found out."

This is something Ardern took issue with as well – "even more disappointing that the leadership of Air NZ were in the dark as well".

Foran's predecessor, National's now Botany MP Chris Luxon, this morning told media he had "no recollection" of any deal between the Air NZ subsidiary and the Saudi military.

"I was unaware of the issue," he said when pushed by reporters.

"It might have post-dated my time but the bottom line is that these are really questions for Air NZ, I haven't worked at Air NZ for some time."

Luxon resigned as the airline's chief executive in September 2019 – Foran this morning said the initial decision on the contract was made in 2019 before he took over the reins at the airline.

Luxon said he was surprised to hear that the company had been working with the Saudi military. "I think we have all been surprised by it".

But when pressed for further detail on the matter, he said a number of times that it was "a matter for Air NZ".

NZME Business Commentator Fran O'Sullivan told Heather du Plessis-Allan that the situation is embarrassing for the airline.

She says that she would have expected people as high up the food chain as Luxon and Foran would be aware of what was happening. 

"Gas Turbines is a separate unit within the overall engineering and maintenance division. It has its own management, it goes out and contracts. I imagine it would have had a lot of pressure on it to grow its business. It's quite a stellar unit, it's well classed."

O'Sullivan says that it is a similar scenario to the food-for-oil case that Fonterra was caught up in, where management said they had no knowledge of third party sales to Iraq. 

text by Jason Walls, NZ Herald