Air NZ tips more job losses may be coming

Rob Fyfe. Photo / Greg Bowker

Air New Zealand says 441 job losses announced yesterday may not be the limit of staff cuts needed to boost profitability, although it will strive to maintain customer service.

Chief executive Rob Fyfe, who will stand down at the end of this year, said the majority Government-owned airline had been "at pains to protect the value proposition to our customers" while seeking operating efficiencies.

"We think that's very powerful - the source of competitive advantage, so this has been very focused on looking at non-customer-facing functions within the business", he said of the job-shredding exercise.

But the Engineering, Printing and Manufacturing Union said it expected to lose about 30 jobs among its members.

Neither could Mr Fyfe "preclude" the possibility of more job cuts in future, on top of 441 positions due to be abolished by July by the airline in which the Government wants to sell down its 74 per cent ownership stake to 51 per cent.

Although the airline has 8232 staff, Mr Fyfe said 193 job cuts had already been made since July, and 73 more would be achieved through not replacing staff yet to resign.

That would leave Air New Zealand having to lay off 175 more, mainly from management and support rather than front-line roles, and redundancy consultations had begun yesterday morning.

Mr Fyfe said that if more cuts were needed to improve the airline's annual profitability by $195 million by 2015, compared with just $38 million after tax reported yesterday, "we will be looking to use attrition wherever we can".

"A very difficult time for people when we have to envisage compulsory redundancies and that is certainly a last resort."

He said the job losses would not see an end to any "major functions" in the business.

"But we've looked at everything from all the reports we produce for example, saying do we need to produce all those reports [and] we're actually creating some new jobs.

"Net, we're losing jobs but we're looking at functions we currently outsource, whether it would be cheaper to bring those inside the company.

"Or likewise whether there are some things we do inside the company that we should look at outsourcing."

Mr Fyfe said the need for such deep cuts followed a doubling of the price of jet fuel over the past three years, in which the weak global economy was hindering Air New Zealand's ability to pass higher costs to passengers.

Airline chairman John Palmer reported solid business for its domestic operation helped by the Rugby World Cup and improved market share between New Zealand and Australia.

But he said the international long-haul network continued to face challenges in the European and Japanese travel markets.

Mr Fyfe said a review of long-haul flights, in which he has previously refused to rule out withdrawing the airline's flagship daily services to London, was nearing completion.

He expected to make announcements about the review in coming weeks, as it focused on strengthening its Pacific Rim network.

Air New Zealand this week announced it would begin its first international flights to Queensland's Sunshine Coast this winter in alliance with Virgin Australia, and that it would operate a twice-weekly service to Bali from June to October.

Mr Fyfe also yesterday announced the airline's first foray into South America, in the form of a charter flight in September to take the All Blacks and their fans to Argentina.