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CEO of Air New Zealand Greg Foran and Board Chair Dame Therese Walsh faced a committee of MPs today.
Air New Zealand has fronted up over its military work, confirming it has repaired engines for eight different navies over the past decade.
The national carrier came under fire after TVNZ revealed on Sunday that the airline’s subsidiary Air New Zealand Gas Turbines has been carrying out work for the Saudi navy, which had been involved in a blockade that prevented food and supplies reaching war torn Yemen. Air NZ chief executive Greg Foran told MPs at a select committee on Thursday that he was aware of five or six countries the company had military contracts with, including the United States, Australia and New Zealand. He would not name any others.
On Friday he released a statement saying that an assessment of past records had identified eight militaries the Gas Turbines business had previously carried out engine repair work for, and work currently underway for five foreign navies is under review.
* Former Air NZ boss Chris Luxon says military contract process was ‘a mistake’
* Call for Air NZ executives to reveal other military deals after ‘not acceptable’ Saudi contract
* Air New Zealand cancels Saudi contract, ‘returns job incomplete’
“Over the past decade, engine repair work has been completed for navies in Australia, Canada, New Zealand, Norway, Taiwan, Turkey, the United States and the recent one-off piece of work for the Royal Saudi Navy.
“The type of work undertaken for these customers includes the overhaul and repair of gas turbines, the major components of these being gas generators or power turbines for navy ships.
“At this time Gas Turbines has engine repair work underway in its Auckland workshop for the Australian, Canadian, Taiwanese, Turkish and United States navies and this work is under review.”
Air New Zealand chief executive Greg Foran says the value of the Saudi contract was of an amount that meant it did not get elevated for the chief executive to be made aware of it.
Air NZ has commissioned a review of the contract work by independent external advisers PwC to determine what happened and what changes were needed, and airline chairman Dame Therese Walsh said it had also appointed QC Mike Heron to the review team.
He will look at the licensing requirements for exporting these specific types of engines with the Ministry of Foreign Affairs and Trade, and the outcome of that review is expected in the next week.
“The full audit will likely take at least two weeks because we will be going over all the files, in some cases manually kept or paper records, even more deeply to ensure we haven’t missed anything.
“This timeframe will also ensure our external advisors PwC have time to review the findings before the final report is reviewed by the Board at the end of February.”
In the meantime, the company which provided Air New Zealand with a controversial Saudi military contract says it will not send any more work on military engines or gas turbines to the airline in future.
After the outcry Air New Zealand terminated the $3 million contract and the job will be returned incomplete.
The airline has apologised to MPs and the public for taking the contract and is reviewing its processes that led to the deal being signed in 2019, when Christopher Luxon, now a National MP, was chief executive.
The Saudi contract was awarded to Air New Zealand via third-party contractor MTU Aero Engines, headquartered in Munich, Germany.
MTU Aero Engines spokesman Eckhard Zanger said it had no other military business with Air New Zealand other than the Saudi military contracts.
The Saudi contracts involved the repair of three LM2500 gas turbines.
Produced by GE Aviation, the LM2500 is a marine gas turbine used by 33 navies worldwide.
It can be used in patrol boats, frigates, destroyers, cruisers, cargo/auxiliary ships and aircraft carriers. It is also available as a military generator set.
There have been 2542 units produced.
Zanger said MTU’s maintenance activities, including business relations involving Saudi Arabia, were in line with German, European and United States export control regulations.
Air New Zealand’s decision to cancel the contract and return the job incomplete was currently being discussed between the parties involved, he said.
MTU Maintenance, the maintenance, repair and overhaul part of MTU Aero Engines had other contracts with Air New Zealand, mainly in the commercial area for non-military applications of industrial gas turbines, and commercial aircraft engines, he said.
Air New Zealand chief executive Greg Foran and chairwoman Dame Therese Walsh appearing before Parliament’s Transport and Infrastructure Select Committee on Thursday.
MTU did not see a reason for discontinuing its work with Air New Zealand, particularly in the commercial gas turbines and aircraft engine area, he said.
MTU has been working with Air New Zealand on commercial aircraft for a number of years but the industrial gas turbines work has been in place since 2019, he said.
On Thursday Air New Zealand’s shareholding minister Grant Robertson said told media he would follow up with Air New Zealand about publicly disclosing the names of the countries it carried out military work for.
“Mr Foran has obviously said today that he knows the number, if he knows the number he knows the name, so I think we should all follow that up,” Robertson said.