Both the union and the airline want to avoid more compulsory redundancies in Air New Zealand's latest round of cost-cutting but worker trust has been profoundly undermined, said Savage, E tū Head of Aviation.

Air NZ, which slashed capacity to 5 per cent in early March as borders shut and customer demand ground to a halt, has already laid off 4,000 people.

It is now looking to remove around $150 million more from its wages bill.

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"Both the union and airline want to avoid more compulsory redundancies but whether voluntary cost saving can be agreed will depend on negotiations," said Savage.

"Unfortunately, the way the company handled the first round of cuts has profoundly undermined trust so the willingness of Air New Zealand workers to give up any terms and conditions is very low at present," he said.

According to Savage, widespread meetings are underway and alongside this process Air NZ Airport workers at all airports and the 787 cabin crew are in contract negotiations, he said.

Air New Zealand meanwhile is still leaving its $900m loan from the government intact. Last week it said it hasn't yet drawn on the facility.

"From our perspective it is inevitable the national airline will need to draw down on the government loan and when and how they do that will be part of the discussions taking place with union members," said Savage.

He noted the pandemic has hit hardest at wide-body flying. The 777 fleet is being put into storage and crews transferred to the 787.

"It's a tough time for wide-body crew. They are supporting each other through tough times. Hundreds of friends have had to leave. There is not a lot of work for those who are left and not many new routes are opening up. They work within strict pandemic safety rules every time they fly and have to self-isolate on return. In the midst of all this are contract negotiations and the risk of further job losses."

The situation is compounded by the fact that there are two different pay and allowance rates for wide-body crew but not on the 787 fleet so that is a new thing, he said.

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Meanwhile, while Air NZ continues to be hard hit by the lack of international travel, domestic travel is picking up and "on regional and domestic routes the company has recalled staff as flying returns and kiwis start travelling for business and leisure," Savage said.

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