New National backbencher MP Chris Luxon made headlines this week: during his previous role as CEO of Air NZ a commercial deal was made with the Royal Saudi Navy to work on two engines and one power turbine module.

For the last five years, the Royal Saudi Navy has been a key part of the Saudi-led coalition’s assault on Yemen, a conflict that has resulted in 233,000 casualties, mostly from indirect causes. On numerous occasions throughout that period the United Nations Human Rights Council has highlighted persistent violations of international war, including possible war crimes and other grave human rights violations committed by Saudi forces.

The Saudi Navy plays a key role in sustaining a comprehensive blockade on Yemen, and have helped to create what UNICEF have described as the world’s worst humanitarian disaster, with 80% of the country in need of urgent humanitarian assistance.

Following yesterday’s media frenzy Air NZ wisely announced that they had cancelled the contract. It’s far from a good look for a Government that opposes the Saudi blockade to be using it as an opportunity to generate revenue, even if the whole thing is managed at arm’s length.

It can’t be said for certain that a publicly-owned airline wouldn’t make a commercial deal with alleged war criminals to uphold a state of ongoing seige, however the obligation to maximise shareholder value puts constant pressure on management to pursue profit above all other values.

Government agencies and state-owned enterprises have no guarantee of behaving, but there are plenty of democratic checks and balances in the way to prevent profiting from flagrant human rights abuses.

Luxon himself - who now has ‘no recollection’ of the incident – has now crossed over from the private to public sector, and will likely face ongoing scrutiny from Air NZ’s largest shareholder, the NZ public.

Air NZ was under Luxon’s tutelage during its partial privatisation, when the Government trimmed its share from 71% to 51% from November 2013, netting $363 million for the taxpayer.

The National Government under John Key (himself a Director of Air NZ when the contract with the Royal Saudi Navy deal was signed) leaned on the idea that ‘mum and dad investors’ would be the primary beneficiaries, There is, however scant evidence to back this claim; most of Air NZ’s major shareholders are investment companies run by major banks like HSBC, Citigroup, BNP Paribas and JP Morgan managing investor wealth.

This includes Luxon, who owns millions of shares and even in the horror year of 2020 received recompense valued at $4.3 million (more than current CEO Greg Foran), despite retiring in June 2019. In October 2020 Air NZ announced they were making 935 international cabin crew redundant.

As the covid crisis hit Air NZ shares fell from their previous $2.80 mark to 85 cents a share. The Government moved fast to bail out the strategically-important national carrier (and its shareholders) in March 2020, extending a loan facility up to $900 million that could be converted into equity if the Government desires.

We won’t find out how much of the loan facility has been drawn down until April, however with the company’s market capitalisation currently around $1.8 billion, it seems that we’ve already put up the money to buy back the half of the company we sold.

We’ve already seen how valuable it is having strategic oversight on the operations of the national carrier during the pandemic period. Every dollar in debt that’s converted to equity is a step in the right direction for public ownership and a good deal for Government.

Edward Miller works at FIRST Union and is the spokesperson for It's Our Future

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