Greg Foran’s decision in 2019 to step down as CEO of Walmart’s $300 billion-a-year U.S. business and run Air New Zealand took industry watchers by surprise. retail. After all, Foran is credited with revitalizing Walmart’s massive fleet of 4,500 stores and making them e-commerce ready. Why would he leave one of the most important positions in retail, and what did he know about running a small airline anyway?
After eight years in the United States and China, Foran was ready to return to his home country of New Zealand and was lured by the opportunity to be CEO with no one above him (CEO of Walmart US reports to the CEO of Walmart Inc.). Although Foran recognizes a big difference between running a giant retailer and a national airline, he says there are commonalities.
He was just days away from his role as CEO of the airline in February 2020 when the pandemic hit, forcing him to harness many of the skills he developed at the CEO of Walmart US and develop the airline’s revitalization plan. “It’s similar to the playbook I had at Walmart US, which was similar to the one I had in China, which was similar to Woolworths,” Foran said. Fortune, referring to the giant retailer from below. “You have to decide what kind of culture you want the company to operate in,” he says. More importantly, “You have to be great at the basics.”
With air travel at a standstill, Foran set about developing a plan to reinvent the airline, focusing on dominating certain routes, building a larger market share in his home country and improving customer service.
But even with the return of air travel, the tests of leadership continue: Air New Zealand recently launched its much-desired direct New York-Auckland route, a service central to Foran’s ambitions for the company. But a few days after his interview with Fortunethe airline has already had to reduce the number of passengers and baggage it allows on these flights to carry more fuel.
This interview has been edited and condensed for clarity.
Fortune: Air New Zealand recently organized its first direct New York-Auckland flight of nearly 18 hours. Why is this so crucial to your plans for the airline?
For a: North America is a big market for us. We have been coming to the United States for 50 years. It started in Los Angeles, then Houston a few years ago, and Chicago shortly before COVID hit. Looking at the aircraft fleet, it made sense to fly to New York since we can now fly directly from Auckland to the East Coast. One of the things that people sometimes don’t realize is that New Zealand is about two and a half hours closer to the United States than Australia, and that’s a competitive advantage.
You seem to be banking on New Zealand’s growing appeal as a business center and not just for tourism.
New Zealand could present itself as a wonderful alternative environment for startups. I hope that will happen, although tourism will probably be the vanguard.
When you took over in February 2020, some of your Asian destinations were already closing. Within five weeks, America and Europe also went into lockdown, forcing Air New Zealand to shut down completely for weeks. Tell us about this experience as a recruit in the company.
The first day I started, a Monday, we stopped flying to Shanghai. The following Monday, we stopped flying to Korea; the following Monday, we stopped flying to Tokyo. The following Monday, we stopped flying to Hong Kong. Then six weeks later, around March 24, business completely stopped, so we went from $100 million a week to nothing. There was a rulebook of what happened on 9/11, when we hit SARS (2003), when we hit Avian Flu (2007). But then you get to March 24 and you have to put the book away. We had to rewrite the rules.
You still didn’t know how the airline industry or business worked. What outside advice did you seek?
Within the industry, there are excellent, experienced and wise people. So I called some friends. And when you’re trying to learn it quickly, it’s really helpful to chat with Willie Walsh, who ran British Airways (Walsh currently heads the industry group International Air Transport Association) and Aer Lingus. There’s another guy in Australia called Rod Eddington (formerly of British Airways and Cathay Pacific.) So I called Rod, and I said, “Help me. What do I do?’
So how did you work during this time and what were your priorities?
I took the playbook I had at Walmart which was very similar to the one I had in China which was similar to Woolworths. You must first decide what kind of culture you want the company to operate in, and you must be able to demonstrate this through your actions and behaviors. Once you have that reasonably clear in your head, then you need to plan. The plan for us was simple: grow our national business and get around 85% market share (compared to around 80% now). It’s a good business, and it’s profitable. And then we are also working to optimize our international business. This means don’t try to fly everywhere; choose where you want to fly and optimize that. You have to be brilliant on the basics: the planes have to leave on time and arrive on time.
New Zealand is a country of 5 million people, a small market. How does a relatively small national airline like yours create a need for itself?
You carve out a niche and increase your market share in that particular niche. Don’t think of Air New Zealand as a $6 billion a year airline competing with United, Delta, British Airways and all the others that make 10 times our revenue. The relevant question is: “What is your market share in New Zealand?” What is your market share on the Auckland-New York route?
What prompted you to accept the position?
I don’t live life in isolation. I have a wife and kids, and she has a say in what I’m going to do and where I’m going. Part of my thinking was also that it might be time to hand that job over to the next person to give them a chance. I don’t believe you have these jobs for life or should. And I really wanted to see what would happen if I tried something different. You know, I was in retail for 14 years. So, how transferable are these skills?
So how transferable are they?
While it helps to have all the technical knowledge to know if this plane is a 787 or a 747, or if it’s GE engines or some other type, you can pick them up pretty quickly. Learning the culture doesn’t happen in five minutes but it’s a fully transferable skill. Knowing how to build a strategy is also transferable. It helps to have some technical knowledge, but you don’t have to have all of that in your toolbox.
What else did you learn from your move from Walmart to Air New Zealand?
One thing that happens in airlines, which is a bit like what happens in retail, is that you create silos when you create teams. For example, merchandising people could focus almost all of their attention on this and become very good at it. But they are not at all interested in keeping distribution centers running smoothly, and vice versa.
How does this translate for airlines?
Airlines are a bit the same. They will want to sell as many tickets as possible on the revenue side of the business, but what consideration do they give to the fleet team responsible for aircraft maintenance? Because if I fly more now, I have more maintenance. What if I don’t have all these planes available because I have four in the hangar that I need to do engine checks on? So we are rewiring Air New Zealand. We now have what we call tribes, which are cross-functional and responsible for integrated planning.
- Foran, the son of two school teachers, began his career stacking shelves in a New Zealand supermarket.
- One of his four children has been a professional rugby league player in Australia for 13 years.
- He arrived at Walmart in 2011 aged 48 after being dismissed as CEO of Australian-New Zealand supermarket chain Woolworths.