KEY POINTS:
Air New Zealand is putting its routes under scrutiny every two to four weeks in the face of world market volatility and threats to profitability on some services which "can turn on a dime".
The airline has said it would continue to make a profit if oil remains
below US$140 a barrel but weakening demand is now looming as an equal threat. Already long-haul capacity has been cut by 6 per cent and chief executive Rob Fyfe said more changes would happen as the impact of meltdown in world financial markets hit demand.
"As the global credit crisis continues to deepen, its impact on demand is now emerging as a major concern for the aviation industry," he said at the company's annual meeting of shareholders.
After the meeting, he said routes reassessed every six months were now under review up to twice a month.
"Every two to four weeks we're asking should we be adjusting on an incremental basis. You have to be in a position to move very fast because traffic flows and profitability on various routes can turn on a dime now."
He would not specify which routes would be under greatest threat but said changes were mainly around the margins, different planes or changed schedules which passengers would not necessarily notice.
Unprecedented volatility in financial and oil markets would have a huge impact on the airline industry - up to 50 could fail this year - but Air New Zealand was in good shape with cash in the bank and little capital expenditure in the next 18 months.
He told shareholders the airline's relatively small size made it flexible.
"While profitability will not be at the same level as during times of high demand, we will not sit back and watch poor performing routes erode our earnings and balance sheet."
Tough times and the reduction in airplane orders could work in Air New Zealand's favour as it could take advantage of purchase costs, he said.
The airline was also expanding opportunities in tourism, travel and airline servicing including airplane refitting and industry training.
Air New Zealand is among a cluster of airlines still under investigation in a global cargo price fixing probe which has already seen some carriers pay hundreds of millions in fines.
John Palmer and Roger France were re-elected and Canterbury tourist operator Paul Bingham was elected to the board. Ken Douglas stepped down.
Air New Zealand's share price closed up 2c at $1.05.
