The union acting for hundreds of Air New Zealand engineers threatened with redundancy says it is delighted the airline is reconsidering its plans.
Air NZ had announced in October that more than 600 staff would lose their jobs due to of a decision to send heavy maintenance work to Asia.
After receiving a proposal from the union, it today confirmed 110 would be made redundant but said the remaining 507 would hear their fate in February.
The EPMU said it was delighted the airline would seriously consider its cost-cutting proposal, which could save more jobs.
Andrew Little, national secretary for the union, said it was "regrettable" Air NZ believed it needed to cut staff, but the most important aspect was that New Zealand would still have an aircraft heavy engineering operation which could be built upon in the future.
He said: "Two months ago we were looking at the complete loss of their operation.
"This workforce has put together a credible, professional case to retain at least part of that work, and succeeded in convincing the company there are alternatives to sending all the work overseas."
Air New Zealand chief executive Rob Fyfe said in a statement today that the decision followed more than 18 months of exhaustive research and consultation with staff and union representatives.
The airline could not say when its engine shop would be closed and the 110 jobs would go.
It said 13 per cent of the 110 jobs were licensed aircraft engineers. The rest were non-licensed aircraft engineers, other trades, supervisory, planning, cleaning, administrative and clerical roles.
Maintenance for the engines of its narrow-body jets and turboprop aircraft is already carried out overseas.
The Engineering, Printing and Manufacturing Union (EPMU) previously put forward a plan to save some jobs. It said the proposal would save the airline $12 million a year and keep 300 jobs in New Zealand.
The airline said the February decision would affect the remaining 507 jobs, including about 95 licensed aircraft engineers in wide body airframe, overhead and support functions.
Mr Fyfe said neither the engine-shop management nor the unions could produce a viable case for keeping the engine maintenance in New Zealand.
"The analysis has painted an extremely bleak picture. Volumes in this business are low and falling."
He said there was considerable excess in international maintenance capacity.
Sending wide body engines overseas was expected to save $53 million over five years.
He said unions accepted significant change was needed if wide body airframe maintenance was to be kept in-house.
He said the Engineering, Printing and Manufacturing Union (EPMU) had put considerable effort into a solution.
"While we have not agreed on everything they have come back to us with, we have been able to find some common ground."
That could include flexible shifts, time-off in lieu and fixed-hour employee arrangements.
Aviation and Marine Engineers' Association (AMEA) national secretary George Ryde said the unions would now be doing all they could to minimise the impact on staff.
"We have redundancy agreements in place, and we'll be looking to see whether staff who want to stay can be redeployed into other parts of the company."