More turbulence ahead for Air NZ

As unions reeled from another round of job cuts at Air New Zealand, the airline was defending its actions - and warning there could be more discomfort ahead.

"The tough decisions unfortunately haven't ended yet," chief executive Rob Fyfe said.

"I am determined Air NZ will become the right size and shape to earn the right to grow going forward."

Yesterday Air NZ announced a possible 470 corporate job losses as it announced its financial position - a 55 per cent fall in first half profit.

The latest swathe of job cuts bring the number of redundancies at Air NZ to 917, after it recently axed 114 cleaners and 310 people from its engineering division.

Cuts to the corporate section would save the airline $45m a year, helping to offset soaring fuel costs.

The national carrier posted a net profit after tax of $46 million for the six months to December 31, compared with $102m a year for the same period a year earlier.

Air NZ chairman John Palmer said higher fuel prices had increased by $174m in the first half .

Staff costs were one of the few business variables Air NZ could control.

"In this brutal business environment, we've been running fast, but sliding backwards," Mr Palmer said.

"Globally there is a surplus capacity in the industry and the consensus is that high fuel prices are here to stay. The bottom line for us is that our costs must fall further next year."

Despite the changes, chief executive Rob Fyfe said the company was sticking to its full year profit forecast of $140m before unusual items.

He said cutting staff was the only option left to save money.

"Over the last two years we have made about $170 million dollars worth of cost cuts in this business and we've done that without cutting any staff numbers virtually - or a very small number of staff.

"You'll recall we took food off our aircraft, we now do a lot of bookings online so we are not paying fees to travel agents ... we've reduced our IT expenditure. Everything we can we've targeted."

The new losses were announced just hours after airline engineers voted to accept a deal that would save about 300 engineering jobs in return to labour reforms.

Engineering, Printing and Manufacturing Union (EPMU) national secretary Andrew Little said the news was unbelievable so soon after the effort to keep the airline's maintenance work in the country.

"Air New Zealand got that wrong and it's probably got this wrong too," he said.

" ...we showed that we are capable of finding solutions that the company seems unable to come up with."

Meanwhile, the Green Party called on the Government to pull Air New Zealand out of its "job-shedding tailspin".

Industrial relations spokeswoman Sue Bradford said the Government, as major shareholder "can no longer wash their hands of the shocking industrial relations behaviour of the airline".

"We bailed out Air New Zealand because of the disastrous decisions of the former owners and management. We did not do this to see Air NZ become a mean, anti-worker company making more bad decisions."

- NZPA