Air New Zealand says it signed a deal with the Saudi Navy in May 2019 – four months before former chief executive Christopher Luxon left the airline.
But a spokeswoman today reiterated the deal wasn’t referred to anybody at the top of the airline where revenue that year was approaching $6 billion.
”This is a reasonably small contract for Air New Zealand in the scheme of things (approximately $3 million) and in 2019 this level of contract did not need to be referred to the executive,” she said.
The deal came via a third party and is controversial given the Saudi military’s role in the war in Yemen which has devastated that country and pushed it to the brink of famine.
Luxon, now MP for Botany, said yesterday he had “no recollection” of any deal between the Air NZ subsidiary Gas Turbines and the Saudi military.
“I was unaware of the issue,” he said, adding it may have been after he left.
Air New Zealand yesterday said it had ceased all work for the Saudi Navy and that it should not have happened and it won’t be repeated.
Today the airline said the previous process followed commercial and technical considerations, but did not account for ethical factors, which is why it was looking at this as part of its wider internal review.
The internal governance review is being run by the airline’s legal and internal audit teams working with an external adviser.
”The internal review is already underway and includes working with Mfat, reviewing the Gas Turbines contracting process to ensure improved oversight of work assigned through third party arrangements, and bringing in an external auditor. We would like it completed as quickly as possible,” the spokeswoman said.
While the Saudi deal has just come to light, Air New Zealand in 2019 trumpeted work worth considerably more it had won with the United States Navy either side of the controversial contract.
On April 2019 it said it had won work on 10 power turbines for the US Navy’s cruisers, the third consecutive contract for work for that country’s fleet.
That work was worth US$17m ($23m) and announced by then chief ground operations officer Carrie Hurihanganui. She said at the time the contract was a significant body of work for the business and demonstrated the robust working relationship with the US Navy.
On July 5, 2019, Hurihanganui announced another US$17m deal to carry out more work on the US Navy’s LM2500 engines.
That then took the total value of work for the US Navy to US$80m since Gas Turbines first started working for New Zealand’s Five Eyes partner in 2017.
“This fourth contract win is a credit to the Gas Turbines team and further strengthens our more-than-20-year relationship with the US Navy. It’s a clear indicator of the calibre of work the team produces,” said Hurihanganui, who is now the airline’s chief operating officer.
The Gas Turbines business began sourcing work in the industrial and marine sector more than 36 years ago and has since supported several of the world’s navies, offshore oil and gas platform operators and power generation companies.
More naval vessels around the world are running on gas turbine engines, the marine equivalent of the engines which power Airbus A320 aircraft.
General Electric says the LM2500 is its most widely-used gas turbine, and is used by 33 navies worldwide.
They are installed in patrol boats, corvettes, frigates, destroyers, cruisers, cargo/auxiliary ships and aircraft carriers.
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