11 Feb 2021

Air NZ chiefs quizzed about Saudi Arabian military links at select committee

12:46 pm on 11 February 2021

Air New Zealand's head honchos were grilled by MPs after revelations the national airline has been working with the Saudi Arabian military.

Watch the select committee meeting back here:

Chief executive Greg Foran and chair Dame Therese Walsh appeared before Parliament's transport select committee to answer questions on its annual review.

On Tuesday, Foran apologised and launched a review into a "third-party contract" under which the airline's gas turbines unit worked on two engines and one power turbine module from vessels belonging to the Royal Saudi Navy.

"I'll be very clear we have fallen short in this regard," Dame Therese told committee.

She told MPs the contract was simply unacceptable.

"It is not within the values of Air New Zealand and our Air New Zealand whānau and nor is it in keeping with the values of all New Zealanders and for that reason I apologise on behalf of Air New Zealand that this has occurred."

An internal review was launched as soon as the chief executive found out about the situation and the Air NZ board has also commissioned an independent external review to be done by PWC, she said.

"We want to know what has happened but we also want to know what needs to change in order to make sure that it doesn't happen again."

Dame Therese said it appears that no other work has been done nor has been contracted to be done with the Saudi navy.

"From what I've been advised this piece of work is the only piece of work we've done with the Saudi Arabian navy and nor do we have any further work coming down the track with that," Foran said.

Foran said it is the difference between 'can you do the work' and 'should you do the work' - and that in this case the work should not have been done.

When Green MP Golriz Ghahraman asked if there is only a monetary threshold for when the CEO is alerted, Foran said on the supply side Air NZ has good processes, on the customer side there are robust processes "what was missing here is the piece that says should we be doing business with this customer?" If the contract had of been over $3 million it would have ended up on his desk, he said. Good on the supply side not on the revenue side.

When asked by Mark Mitchell why it took so long to answer media enquiries about the issue Foran said it was initially tacked by a junior communications person and they then got caught up in third party confidentiality issues which Foran said was an incorrect approach. Foran said it was brought to his attention 12 days ago and he took immediate action.

Dame Therese said there is an internal review underway, an external review commissioned by the board and that will need to be considered and any changes made. She said they expect to be able to come back to the public about what has happened within a couple of weeks.

Ghahraman asked for the dates of contracts, dates of delivery and who was CEO on those dates.

Foran replied the contracts for Saudi engines was signed in May 2019, the first of the engines arrived in September 2019, and there is also some work that still needs to be sent back.

He said he thought Chris Luxon was CEO at that time, "but had I been CEO at that time I would not have seen the contract on my desk because we would not have elevated it up".

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