Air New Zealand is understood to be considering axing hundreds of jobs as it seeks to claw back $1 million dollar a week losses suffered on its long-haul network.
The company has confirmed that a review of its long-haul operation is underway and it has refused to rule out withdrawing its flagship daily services to London.
The airline said yesterday that a comment attributed to chief executive Rob Fyfe by a Wellington newspaper, that pulling out of London was an option, was done so "out of context".
But a spokeswoman told the Herald last night that Mr Fyfe was clear in a communication to staff that the future of flying beyond Hong Kong and Los Angeles depended on the airline's ability to achieve operating efficiencies and to build partnerships to ensure profitability.
Market speculation about what the changes might meant was understandable, the company said.
"However Air New Zealand will not be commenting on those speculations while our reviews are underway," a spokesperson said.
The company reportedly told staff a corporate overhead review was under way.
The news comes as Air New Zealand aims to boost profits by $110 million in time the 2015 financial year.
The airline, in which the Government is considering reducing its ownership stake from 74 per cent to 51 per cent, is several months into a review of a long-haul operation on which it lost $1 million a week in the second half of the last financial year.
The airline flies daily to London through both Los Angeles and Hong Kong, and House of Travel director Brent Thomas said he did not think it would sever such a long-standing connection with Britain as it was "synonymous with Kiwis travelling up there".
"But obviously they've got to look at what's viable and what's not."
The greatest potential difficulty from a withdrawal by Air NZ was the loss of cheap "add-on" flights from provincial centres to catch long-haul services from Auckland or Christchurch.
Mr Thomas said the British Government's decision to increase departure tax next April for passengers leaving London for New Zealand, from £85 ($172) to £92 ($186) would further undermine the viability of the service.
He said many Kiwis were choosing to avoid the tax after flying to London but then returning home from a European airport, at a potential saving of almost $700 for a family of four.
"More and more people are flying into London, travelling around Britain, then departing out of Europe."
The Air NZ spokeswoman did not comment on the extent to which the tax increase would influence the review of long-haul services, although she said it was "naturally of concern" for the airline.
* Air New Zealand is considering pulling out of London as a destination.
*The airline lost $1 million a week on long-haul operations in the second half of the last financial year.
*Travellers choosing other airlines and flying out of Europe to avoid high departure taxes could be contributing factors.
*The Government is also considering reducing its ownership stake from 74 per cent to 51 per cent.By Mathew Dearnaley Email Mathew, Susie Nordqvist Email Susie