Air New Zealand has this morning unveiled a big plunge in profits for the first half of the financial year, with a 71pc drop in normalised earnings before tax.
Net profits after tax were down $60m to $38m for the six months ended December 31.
"Acknowledging this disappointing result we have already commenced a series of initiatives to improve the airline's profitability by more than $195 million per annum by FY15 through a combination of cost reduction, improved efficiencies and revenue growth," said airline chief executive Rob Fyfe.
"The price of jet fuel has doubled over the last three years but a weak global economy is hindering our ability to pass on these higher fuel costs to passengers," he said.
"Therefore we have been moving quickly to adapt, to gain greater efficiencies and to develop into a stronger, more profitable business."
Air NZ chairman John Palmer said 266 roles would be removed through "non-replacement of roles or non-renewal of contracts'' and 193 had already gone.
The remaining roles would be achieved through redundancies and the consultation process would begin this morning.
Palmer said the operating market was "extremely difficult" at present, squeezing profits.
"The airline has enjoyed a solid performance from the domestic network including benefits from the Rugby Word Cup and improved market share on the Tasman, but the international long haul network continues to face a challenging time in the European and Japanese travel markets," he said.
Despite this, the company's balance sheet remained strong and a two cents per share interim dividend would be paid to shareholders.
Fyfe said the airline has worked hard to improve its competitive position with a number of initiatives already delivering towards the airline's target of significantly improved future profitability.
"We plan to remove 441 roles from the business before the end of the financial year. A total of 266 of these roles are being exited through non replacement of roles or non renewal of contracts, of which 193 have already been achieved. The removal of the remaining 175 roles will result in redundancies and we begin the consultation process with affected staff this morning.
Fyfe said the "International Network review" was nearing completion with further announcements to be made over the coming weeks as the airline focuses on strengthening its Pacific Rim network.
Result key highlights:
• Normalised earnings before taxation of $33 million, down $79 million
• Net profit after taxation of $38 million, down $60 million
• Operating revenue up 2.5 per cent to $2,291 million
• Number of passengers carried down 0.6 per cent
• Net cash position of $912 million
• Interim dividend of 2 cents per share
• Net gearing at 49 per cent, an increase of 2.3 per cent from June 2011
NZ HERALD ONLINE/APNZ