Recalling the dark days of 2001 at Air New Zealand, when the Kiwi carrier was bailed out by its government after the collapse of Ansett, Ralph Norris likes to paraphrase Winston Churchill.

“Never waste a crisis,” Norris says.

“You have the opportunity to make changes and do things in a much quicker time frame than you would in a normal-state situation.

“Qantas was a fearsome competitor and putting a lot of pressure on Air New Zealand. We had to change very, very quickly.”

Norris, who was parachuted into the chief executive role after serving on its board, .initially focused on the thousands of staff.

He ran a series of two-day sessions with 800 employees at a time, explaining the tough external environment meant change was needed and laying out a strategy for the future.

But first, he gave employees the .opportunity to vent their frustration about its near collapse.

“We started those sessions off with what we called the ‘mad, sad and glad session’.

“The first few hours . . . were about people saying what made them mad about what had happened, what made them sad about what had happened and thinking about things about the airline that made them glad – what they would like to see carried into the future, the good things about the company.”

Norris says the sessions explained the challenges from new low-cost entrants such as Virgin Blue. As a result, Air NZ did away with domestic business class, standardised its narrow-body fleet to Airbus A320s, its wide-body fleet to Boeings and updated its tired long-haul service. That included .dropping first class and introducing .premium economy seats.

The airline decided to shut down its low-cost subsidiary Freedom Air and absorb it into the mainline division.

“We came to the view that there were issues in our mainline carrier so we had to overhaul it,” Norris says.

He says it was important to focus attention on the main business and avoid the risk of having two organisations with different fleets and head office structures, and duplicated functions, as Qantas Airways has with its budget arm Jetstar.

Pay cuts for all, bonuses for all

Air NZ, like Qantas, is heavily unionised. A pay freeze for lower-level employees was made more palatable by top executives .taking a 20 per cent pay cut and middle .management a 10 per cent pay cut.

“The great thing was that after the first two years we were able to pay a bonus to all of our staff,” Norris says.

“We actually got back into profit much sooner than we expected and the organisation’s customer satisfaction levels were increasingly significant.”

The return to profitability helped give the management team and the board, led by then chairman John Palmer, the confidence to place a large order for new long-haul aircraft. That included the 787-9, the stretch version of the Dreamliner, which made its delivery flight to Auckland on Friday. Air NZ was the first airline in the world to take delivery of the new plane.

The Kiwi carrier is now the most pro.fitable airline in Australia. It expects to report a full-year pre-tax profit of at least $NZ300 million ($282 million) in August, which compares with analysts’ forecasts for a pre-tax loss of $731 million at its once-stronger rival Qantas.

Within the airline industry, Air NZ has plenty of admirers.

Dominic Walsh, the managing director of brand consulting firm Landor Australia, has worked for Qantas and Jetstar. He says Air NZ’s focus on innovation is much more exciting for customers and employees than Qantas’s cost cutting.

“You have seen Air NZ taken a lead [on Qantas],” Walsh says.

“You get a sense Air NZ has a clear vision for the future and where future growth is going to come from. I think there is still a .tension between Qantas and Jetstar in terms of how they happily co-exist.”

Over the past decade, Air NZ has beaten Qantas with innovations such as a business class seat that can be reclined for take-off and landing, a premium economy cabin, a Skycouch in economy that can become a lie-flat seat, kiosk-based check-in for international flights and a travel debit card linked to its frequent flyer scheme. Soon it will offer a TripAdvisor app on the in-flight .enter.tainment system.

There are also its famous safety videos featuring celebrities such as Sports Illustrated swimsuit models, Bear Grylls, Betty White and Richard Simmons. They have helped to promote the brand worldwide.

“I think the marketing has done a fabulous job in the last four or five years,” Air NZ chief financial officer Rob McDonald says.

“It is really hard for an airline our size to cut through in markets like the US. Multiple times in a year we will get ourselves on prime time television in America, whether it is The Hobbit stuff, whether it is Sports Illustrated safety, the body painting safety videos, Betty White, all that sort of stuff.”

The Sports Illustrated models safety video has had nearly 6 million online views, which is more than the population of New Zealand.

Perhaps in part because it has Jetstar, Qantas has been focusing its marketing efforts the hardest on attracting premium passengers. In contrast, Air NZ has taken a quirkier, more egalitarian approach.

Carrie Hurihanganui, Air NZ’s general manager for customer experience, says the airline’s brand promise is about “liberating from the ordinary”, whether that means amusing wallpaper in its bathrooms or providing striped purple socks rather than plain black ones in its amenity kits.

“For us, it is about how do we create an experience that customers might tell their friends about?” she says.

Focus on product

Despite its recent financial troubles, Qantas has not lost its focus on its product. It has introduced new staff uniforms, will install fully flat business class seats in its A330s and has opened new airport lounges in Los Angeles, Hong Kong and Singapore.

“We know what is most important to our customers is that service experience and what they love about Qantas is that really authentic, genuine service we offer them,” Qantas head of creative development and customer experience Kylie Morris says.

“So we really focus on that when we design products, whether it is an aircraft seat or whether it is pyjamas, we want to have a service interaction with you.”

With its international division losing money, one investment Qantas has not been able to make are new, fuel-efficient aircraft like the 787-9s bought by Air NZ.

Qantas has options and purchase rights over 50 of the aircraft but it won’t make any decisions until its international business stops losing money.

Norris says a decision 10 years ago to buy 777s and 787-9s was a crucial milestone for the future of Air NZ’s long-haul fleet.

“We needed to make sure if we were going to remain competitive, we had to have a good product,” he says.

“But we also needed to make sure that what we were going to put in place had .superior operating economics so that we could lower the cost of the operation. So you needed to get the 787 aircraft.”

US firm to make ‘minor’ alterations to back up power and altitude systems on Air NZ’s version of hi-tech aircraft

Air New Zealand's Dreamliner will need modifications to equipment including the "last line of defence" that provides back-up power in the remote event of a dual engine failure.

The plane, which arrived on Friday, was granted a safety waiver by the United States Federal Aviation Authority (FAA) to cover two systems that didn't comply with airworthiness regulations.

One issue relates to the Ram Air Turbine (RAT), a small windmill in the belly of the plane that is deployed to provide enough electrical power for flight controls if both engines fail.

Another problem has been identified with an altitude selector.

This country's safety body, the Civil Aviation Authority, said it was satisfied with the FAA decision.

Boeing's vice-president of development for the 787 programme, Mark Jenks, was on the 14-hour delivery flight and said the fixes were minor.

"We have plans to close those out, they're fairly minor issues and we have plans in place and there's no concern there," he told the Business Herald.

It is reasonably common for new aircraft, especially the first of a new model, to require some modifications by the supplier after delivery.

Air New Zealand said both issues were publicly notified as part of the flight manual approval process by the FAA. Neither has a material effect on safety and the problem would be fixed next year.

"With respect to the Ram Air Turbine the likelihood of an occurrence that would affect the safety of flight is considered extremely improbable by the FAA and therefore acceptable from a certification perspective," a spokeswoman said.

Aviation Week reported Boeing 787 chief project engineer and vice-president Bob Whittington as saying that the probability of the RAT being used before the fix was in the region of one in a trillion.

"You have to lose six generators before you need the RAT," Whittington said.

The capacitor in the turbine found to be at fault showed evidence of degrading only after being used several times during flight testing - a circumstance that an in-service aircraft would never experience, Aviation Week reported.

The altitude-select dial in the cockpit will also be fixed on planes now being delivered. Flight crew set the altitude by pressing and then rotating the dial which was found to lack sufficient torque resistance so could be wrongly set.

The Air New Zealand spokeswoman said the altitude selector issue was mitigated by adhering to an operational manual procedure for the pilot to visually check the setting whenever the dial is touched.

Morgan Tait climbs aboard for the inaugural flight of Air New Zealand's new Dreamliner.

The plane: Boeing 787-9 Dreamliner. The national carrier has taken delivery of the first Dash-9.

Class: Premium Economy.

Price: We didn't pay for this - we were hosted by Air New Zealand as this was the delivery flight of a new aircraft. Seats were unavailable for purchase and there is no existing service between Seattle and Auckland.

On time: Right on the button - although unfortunately the foul weather above Auckland ruled out the planned circuit of the city before landing.

My seat: Very comfortable, large seats with extendable foot rest and reclining ability. These premium economy seats are different from the white, wide-body Spaceseats that feature in the 777-300 fleet.

Fellow passengers: Airline, Boeing and Rolls Royce executives plus international media. There was lots of walking around and interaction between passengers, all of whom were pretty excited to be aboard.

How full: 1/3

Entertainment: The new inflight entertainment system operates like a tablet and not only has viewing material but allows you to call staff, order food and drinks and even turn on a reading light. Very easy to use.

The service: Excellent.

Food and drink: A special delivery-flight menu offered three-course breakfast, lunch and dinner with a range of choices.

I had fruit and granola for breakfast followed by a salmon and fish entree for lunch with an antipasto platter and dulce de leche icecream. For dinner, I had a duck breast entree with a chicken breast and rice pilaf main.

The toilets: Very clean and had been stocked with luxury Antipodes soap.

Luggage: No problems there, plus plenty of room in the overhead locker for carry-on.

The airport experience: We departed from the Boeing Delivery Centre in Seattle so it was relaxed and stress-free compared with larger airports. In Auckland, we were greeted with a haka.

Would I fly this again? Definitely ... if the chance arose. Unfortunately, delivery flights for brand new aircraft like this are rare.

Air New Zealand will commemorate its 75th anniversary with an exhibition at the country’s national museum Te Papa in Wellington.

The airline will celebrate 75 years of operations during 2015, and is working with Te Papa to launch a six month retrospective exhibition that will open on December 20 2014.

“Our airline has been an integral part of the fabric of New Zealand and we have enjoyed the immense support of New Zealanders for almost 75 years,” airline CEO Christopher Luxon said in announcing the exhibition on July 22. “The exhibition, which will be free to attend, will give the public a real insight into the history of the airline, covering both the highs and the lows we’ve experienced in that time.”

Te Papa’s Acting Chief Executive and Kaihautū, Arapata Hakiwai,said the national museum is excited to be working with Air New Zealand to bring its history to life. “Air New Zealand’s 75th anniversary is a milestone, and it presents us with a great opportunity to share some of the wonderful personal stories that have shaped its rich history.”

A flight attendant who worked for Air New Zealand for 24 years has been charged with bringing 25 grams of methamphetamine, with a street value of $581, into the country.

Douglas Wayne Reimer, 49, appeared in the Manukau District Court yesterday, facing the charge of importing methamphetamine, which was concealed in his uniform jacket.

The former flight attendant previously appeared in court in May when he was granted interim name suppression because his father was terminally ill.

Suppression was lifted yesterday and defence lawyer Bruce Hesketh said his client's father had now died, and Reimer did not want to cast suspicion on his former colleagues.

Court documents show police allege Reimer arrived on a flight from Los Angeles at Auckland Airport at 6am on May 15.

He signed an air crew declaration form, saying he was not bringing any illegal goods into New Zealand.

The maximum penalty for importing methamphetamine is life imprisonment.

An Air New Zealand flight from Hawaii to Auckland was cancelled last night after suffering engine trouble.

The 227 passengers were returned to Honolulu airport after flight NZ9 aborted its take off late last night, the airline said.

The passengers stayed overnight at a hotel.

"The aircraft is currently being inspected by engineers and [an] updated departure time will be advised to passengers later today," an Air NZ spokeswoman said.

The New Zealand Herald's editor-in-chief Tim Murphy was on board the flight, and tweeted updates about the flight's problems.

He said the take off was aborted "at speed mid-runway" at Honolulu after an indication that the left engine temperature was raised.

"After aborted takeoff, NZ9 Honolulu-Akl now likely cancelled as replacement part to fix engine/indicator light must come from mainland US.

"After 'scouring Honolulu airport for parts' NZ9 is officially cancelled and with crew needing 10 hour break it's back to the beach for all," he tweeted.

Passengers stranded in Hawaii after an aborted Air New Zealand flight will spend a third night in hotels.

A faulty indication system prompted pilots to cancel flight NZ09 on Sunday NZT. Two rescheduled departures were cancelled after Air NZ tried to repair the faulty system on the Boeing 767-300 aircraft.

This afternoon the airline announced that a replacement part flown in to fix the fault had "failed to resolve the engineering issue as expected".

"Another replacement part is currently en-route to Honolulu where we have engineers standing by to receive and fit it, however, that work is unlikely to be completed until the early hours of tomorrow morning," a spokeswoman said.

"To allow our customers to have a night's rest and to arrive in Auckland at a time that still allows connections to domestic and trans-Tasman services we have elected to reschedule the flight from 6pm on Monday local time [4pm on Tuesday NZT] to 7.30am on Tuesday local time [5.30am on Wednesday NZT]."



The rescheduled flight will operate as NZ6889 and is expected to arrive in Auckland at 2pm on Wednesday July 30.

One passenger said disgruntled travellers are requesting the flight be put back, so already "grumpy" children do not have to leave hotels at 5am local time.

Meanwhile, a number of passengers were earlier placed onto an Hawaiian Airlines flight, which is due to arrive in Auckland later this evening.

It is believed around 90 of the 227 stranded passengers were transferred to this flight.

The original flight NZ09 was aborted during takeoff.

The New Zealand Herald's editor-in-chief Tim Murphy was on board the flight, and tweeted updates about the problems last night.

The take off was aborted "at speed mid-runway", he said, after an indication that the left engine temperature was raised.

"After aborted takeoff, NZ9 Honolulu-Akl now likely cancelled as replacement part to fix engine/indicator light must come from mainland US," he posted.

"After 'scouring Honolulu airport for parts' NZ9 is officially cancelled and with crew needing 10 hour break it's back to the beach for all."

He is understood to be among the passengers transferred to the Hawaiian Airlines flight.

The two day delay has been marked by complaints of a lack of communication from Air NZ to stranded passengers, some complaining they'd had "no updates from anyone".

In response Air NZ said: "Exercise Rimpac, the world's largest military exercise, is currently taking place in Honolulu. The event attracts 25,000 participants so as you can appreciate the customers were distributed across a number of hotels in order to secure the required number of rooms at short notice. This has made communicating with them challenging."

Air New Zealand is trying to sweeten a raw deal for passengers who have been stranded in Hawaii since Sunday night (NZT) by issuing a $1,000 apology to each passenger.

The airline said it “unreservedly apologises” to the 227 passengers who had been stranded in Honolulu due to the ongoing problems with the plane scheduled to fly them to Auckland.

It said it would compensate every passenger $1,000 in either cash or Airpoints Dollars, costing the airline $227,000.

Flight NZ9, which was now scheduled to operate as flight NZ6889, from Honolulu to Auckland, was now expected to depart tomorrow morning (NZT).

Earlier today the flight had been tentatively scheduled to depart around noon (NZT), the departure time was then shifted until 4pm (6pm Monday local time), but the latest from Air New Zealand had the plane on the ground until 5.30am (7.30am Tuesday local time).

The aircraft was now expected to arrive in Auckland at 2pm on Wednesday.

The problem with the plane was that although there was no fault with the engine, the indication system had been showing there was an issue.

The further delay was due to the replacement part, sourced from within the United States, failing to resolve the issue as expected.

Another replacement part was currently en route to Honolulu from Auckland where engineers were standing by to fit it this evening.

However, that work was unlikely to be completed until the early hours of tomorrow morning.

Nearly half the customers affected by delays would arrive in Auckland this evening on Hawaiian Airlines, but the remaining passengers would have to wait until tomorrow morning to leave Honolulu.

Air New Zealand general manager of customer experience Carrie Hurihanganui said the decision to offer the money was made due to the lengthy nature of the disruption, the difficulty the airline had experienced in adequately communicating with customers, and the fact it had repeatedly let them down.

The passengers were sent to hotels while waiting for the plane to be fixed.

The passengers had travelled to Honolulu Airport on three occasions expecting to fly, but on each occasion the aircraft had been unable to depart because of a series of evolving engineering issues, she said.

Hurihanganui described the circumstances as an “unfortunate combination of events”.

The airline said it recognised passengers had been significantly inconvenienced.

"However, aircraft safety is paramount and non-negotiable and our team is working as quickly as possible to resolve the situation."

Some passengers had taken to Twitter to provide updates of the progress, or lack of it, in getting them to Auckland.

Among them is businessman Sam Morgan. In his latest tweet he questioned why Air NZ did not have a webpage or Twitter feed to keep stranded passengers updated.

Doug Wilson also took to Twitter to vent his frustrations at the long stopover his children and grandchildren were putting up with in Honolulu: "Our kids and grand kids making their 3rd bus trip to Honolulu airport trying get home."

Wilson's son, his wife, and their two children, aged three and six, were due to arrive back in Auckland at 10.30pm tonight after waiting out long delays in Honolulu.

Wilson said the children found it difficult to cope with the delays and the parents had to deal with a lack of information from the airline.

"Air NZ gets a big fail for communication."

The family were provided with hotel rooms for two nights but arrived at the hotel in the middle of the night both times and had to make three trips to the airport, with long waits, Wilson said.

While he thought the compensation offered by Air New Zealand was adequate, it did not make up for the spoiling of a holiday, he said.

Hurihanganui said Air New Zealand was sorry to have let its customers down and would conduct a full review to see how it could have managed the disruption better.

- Stuff