New Zealand Post will stay Government-owned, says Finance Minister Bill English after news it is axing up to 500 jobs over the next three months.

The planned cuts, announced today, form part of the 1500 to 2000 job losses NZ Post signalled at the end of 2013.

"New Zealand Post can confirm it is about to enter a period of consultation with, predominantly, managers and specialists at head office and in support roles. The roles are mainly in Wellington, Auckland and Christchurch," a spokesman said today.

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Commenting on the news, English said NZ Post was adjusting to the reality of falling letter volumes and "working out how to become a bit more of a logistics company".

Asked by reporters if the Government wanted to own a logistics company, English said:
"It's Government-owned, we're going to be keeping it, so they'll have to find a solution."

English said NZ Post and its subsidiary Kiwibank were working out what was the best long-term arrangement between them.

Queried over whether the two state-owned entities could be split up, English said there was already a "degree of separation" between them.

He said there had been discussions over whether NZ Post was subsidising Kiwibank or not.

"Certainly through the start-up phase it has been but NZ Post can't afford to keep cross-subsidising the bank," he said.

NZ Post said today that its proposal over the 500 jobs and other changes "have been widely signalled."

"The process is part of our ongoing change as we redefine ourselves for the future - in response to an annual $20 million-$30 million fall in revenue as people send 60 million fewer letters every year.

"New Zealand Post will continue to deliver mail but increasingly the future is in the parcels space, as online shopping continues to grow."

NZ Post reported a profit of $110 million in the six months ended December 31, from $100 million a year earlier.

Stripping out the gain from asset sales, earnings fell 14 per cent to $74 million on an 8.8 percent drop in revenue to $766 million.

The state-owned enterprise pared back its traditional letter-delivery service last year and moved to alternate day delivery for standard letters in urban areas. At the same time, the group has targeted earnings growth from Kiwibank, which was established 14 years ago.

Letter volumes fell by about 60 million units in the past 12 months, and chief executive Brian Roche said at the time of the result that the company was losing $20 million to $30 million every year from lower letter volumes.