Air NZ cutting certain domestic fares by up to 50 per cent

The pricing shakeup comes after Air New Zealand last month slashed its full-year earnings forecast. Photo / Winston Aldworth

Air New Zealand is preparing to cut fares by up to 50 per cent on a swathe of its domestic routes.

The Herald understands the airline is working on a strategy to try and stimulate its domestic market, especially the regional routes, since it announced a profit downgrade last month.

The airline is set to reveal dramatic price cuts of up to 50 per cent off its entry-level fares on more than 40 routes in the next 48 hours.

Air New Zealand is yet to respond to a request for comment.

The company last month slashed its full-year earnings forecast.

It cut pre-tax earnings guidance to a range of $340-$400 million for the June year due to slower-than-expected revenue growth. The company's share price has slumped since the move and the stock is currently trading at $2.65.

The previously announced guidance before the cut was for underlying earnings before tax of $425-$525m, which excluded an estimated $30m to $40m impact of schedule changes prompted by the Rolls-Royce engine issues.

If the forecast came in at the mid-point, the guidance would represent a 16 per cent decline.

Air NZ said the revision reflected updated revenue forecasts based on recent forward booking trends.

"Revenue growth is forecast to remain positive, albeit at a slower rate than previously anticipated," it said last month.

The cut sent shockwaves throughout the tourism industry that its golden run was coming to an end.