It's one thing to talk the talk, but it is rarer for CEO's walk the talk when it comes to risking their own financial interests. However, Air New Zealand CEO Greg Foran did just that last week, putting his hard-earned money on the line and dropping a lazy NZ$1 million to buy Air New Zealand shares. If watchers of that airline need a clear signal of Air New Zealand's future fortunes, the CEO has just sent out one.

Two shares buys over two days

In an update to the Australian Stock Exchange (ASX) on Wednesday morning (Air New Zealand is listed on both the Australian and New Zealand stock exchanges), Air New Zealand revealed Mr Foran bought slightly more than 1.46 million shares in the airline last week in two trades. Last Tuesday, the CEO purchased 1,170,000 ordinary shares for NZ$796,868.40. The following day, Mr Foran hit the buy button again, picking up another 294,000 ordinary shares for NZ$204.111.02. All up, Mr Foran spent NZ$1,000,097.94 (or approximately US$710,544).

New Zealand's financial year ends on March 31, but Air New Zealand won't release its final report (which details executive salaries) until later this year. However, in the 12 months to March 31, 2021, Mr Foran earned NZ$3,576,652, including a base salary of NZ$1,650,000. On those numbers, last week's share buys represented a little over four months' work for Mr Foran.

Air New Zealand CEO Greg Foran
Air New Zealand's latest shareholder, CEO Greg Foran. Photo: Air New Zealand

Small loss in the first week

While Greg Foran holds over two million rights options that are convertible into shares, this was his first Air New Zealand share purchase. Mr Foran took the top job at Air New Zealand in February 2020. Granted, you can't hold the two-year delay in investing directly in the airline against the man. The pandemic buffeted Air New Zealand and its share price. When Mr Foran was first settling into the top job, Air New Zealand's share price was hovering just under NZ$1.90. It subsequently fell off a financial cliff, bottoming out around NZ$0.80 in June 2020.

Since then, the share price has jumped around, reflecting the changing fortunes of Air New Zealand and pandemic predictions of the time. In the last month, shares have taken another tumble, falling from the mid-eighties about a month ago to NZ$0.66 on Wednesday morning. Mr Foran paid NZ$0.675 for his shares - so he has incurred a small loss already.

With borders reopened, demand is booming so the airline is scaling up quick.
Photo: Getty Images

A signal on the Air New Zealand's future from the CEO

But no person, CEO or otherwise, slaps a million down expecting the investment to tank. Mr Foran's share buy sends a clear signal that he has confidence in Air New Zealand's future. Presumably, he expects the share price to climb and also hopes to make a few bucks.

Air New Zealand recently flagged an NZ$800 million-plus loss for the year ending March 31, 2022, and the airline pointedly thanked shareholders for their support and patience. But New Zealand is also moving on border reopenings and that's giving Air New Zealand some swift uplift. Typically, the airline generates 80% of its revenues from international flying, and international flying has been substantially curtailed during most of Mr Foran's tenure. That's now changing.

And if there's one person who knows where an organization is heading, it's the CEO. Last week's share buy sends out a clear signal where Greg Foran thinks Air New Zealand is heading and that is something a lot of Air New Zealand watchers will note.