Prime Minister John Key said, with great sadness, the Government would assist the families and those affected in the tragedy in any way it could.
"On behalf of all New Zealanders I would like to express my sincere condolences to the friends, families and colleagues of the five New Zealanders now feared dead in the crash," Mr Key said.
The plane carrying the five men and two German pilots crashed in the Mediterranean near Perpignan after taking off from the city for Frankfurt early this morning.
At least one body has been recovered from the scene of the crash.
The search by naval ships is continuing overnight French time though aerial searches have been temporarily halted.
Conditions are difficult with 30 knot winds and rain and the sea temperature is only about 13C.
Air NZ CEO Rob Fyfe said in an update at 3pm this afternoon that one of the families had said they wanted to travel to the scene while the others were still to make a decision.
He said Air New Zealand would "spare no expense" to meet whatever the families wanted.
Witness reports suggested the aircraft was low in the sky when the accident happened, he said.
At a briefing for Air NZ staff at their Auckland headquarters this afternoon there were tears and people expressed great concern at what had happened.
Mr Fyfe, who earlier said he was hopeful of there being survivors, added: "We have conveyed to the families that while we hold out hope and we will keep hoping, the search and rescue teams in France are not hopeful of finding any survivors."
Mr Fyfe said he had spoken to the partners of each of the missing men.
"This is an unbelievably difficult time for the families of those who are missing. I conveyed to them my deepest sympathies and those of all Air New Zealanders as we await further information on their loved ones," he said.
"I was also able to re-assure them that Air New Zealand is receiving the full support of the New Zealand Government and the Search and Rescue authorities in France and we are confident that everything is being done to locate those still missing."
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In brief:
* Air NZ Airbus 320 crashes 4.30am NZT off French Coast
* Five New Zealanders - four Air New Zealand staff and a CAA inspector - and two German pilots on board
* At least one body recovered. Local authorities say no hope of survivors
* Flight heading from Perpignan for Frankfurt on acceptance flight when crashed
* A320 leased by German company XL for two years but being handed back to Air NZ
Do you have any information on the crash? Email nzherald.co.nz
Local officials have said there is no hope of survivors from the crash but Mr Fyfe told media today he was hopeful some of those on board would be found alive.
"I'm hopeful there might still be survivors," he told a media conference at 10.30am.
Mr Fyfe said rescue teams had found debris and pieces of the aircraft floating on the surface of the water which could indicate survivors may yet be in the sea.
Victims' families
Mr Fyfe earlier said support teams from Air New Zealand were with the families of the missing New Zealanders.
He said he would fly to Perpignan this evening and had offered places to any family members who wanted to go there.
Air New Zealand deputy CEO Norm Thompson will fly to France on the first available flight, at midday.
"I think here at Air NZ it is a very tight-knit team and people are feeling a real deep concern at the moment. I have had endless calls from people offering support and wanting to do anything they can to assist," Mr Fyfe said.
"It's a very, very difficult time when there is any possibility that some of our colleagues may have been hurt, injured or potentially killed. That creates a lot of emotion so it's really difficult."
Wellington-based CAA inspector on board
The CAA inspector on board the flight was there to recertify the plane before it was returned to New Zealand.
Recertification of planes is normal practice when an aircraft has been used by another airline and is about to be registered in New Zealand.
CAA spokesman Mr Sommer said the CAA wouldn't be involved in the investigation but the Transport Accident Investigation Commission could be.
Transport Minister Steven Joyce said the Government was getting regular updates on the situation.
"Obviously the New Zealand Government has grave concerns and is being updated on developments," he said.
Mr Joyce said it was premature to comment on what shape any investigation might take, although he fully expected New Zealand agencies to play a part.
"But our thoughts right now are with the families, friends, and colleagues of those who were on board."
Acceptance flight
At an Air New Zealand media conference this morning, Rob Fyfe gave further details of the acceptance flight, which was a handover from German charter company XL Airways, which had leased the Airbus 320 from Air NZ for the last two years.
He said the plane had left Perpignan and flown for two hours as part of the test flight. It was captained by the two XL pilots as the plane was still on the German airline's register.
"The role of our team was to observe the performance of the aircraft and to validate that it met Air NZ operating standards and the return policies requirements," he said.
"All of the ground checks on that aircraft had been completed. The maintenance had been completed and it was on an acceptance flight."
Witness reports
Maritime affairs officer Nicolas Renaud told BFM television French authorities had been alerted to the accident by the skipper of a sailing boat who said he saw the plane go down.
"The plane appears to be in several pieces," he said.
An eyewitness told FR3 11pm news that the plane was flying low - at approximately 300m - towards Perpignan Airport when it appeared to have tried a sea landing, but collapsed to one side before being submerged.
He said there was nothing to indicate the plane was about to crash other than its low altitude.
A member of the local government in Roussillon told France Info: "The plane, while coming into land at Canet-en-Roussillon, had started to turn and went straight into the sea."
Another witness told the radio station he saw the Airbus dive abruptly and plunge into the sea.
"There was no fire, nothing," the witness, a local policeman said.
"It was flying straight, then it turned brutally towards the ground. I said to myself it will never pull out and there was a big spray of water," he said.
One witness who watched the accident happen from the coast told local newspaper
L'Independant
the plane "made an attempt to climb but fell back down again immediately".
"I saw an enormous splash of water then, a few seconds later, I heard the noise. It was terrifying."
Cause of crash unclear
A French journalist said it was unclear why the plane had crashed.
"It's not really clear on what happened...the plane was flying for one hour and a half and suddenly fell down to the sea," he told Radio New Zealand.
"There was no explosion, it was flying (at) 300m and suddenly fell down into the sea, but no explosion."
Speaking to reporters at Air New Zealand's Auckland headquarters this morning, Mr Fyfe said there was no indication yet of any Mayday calls or distress alerts to ground crew from the plane, which was returning to Perpignan when it crashed.
A spokesman for XL Airways said: "At this point we do not know exactly what happened. At first we heard the plane had managed an emergency landing on water but then the coast guard said the plane had broken apart."
A French official earlier said there was no hope of anyone being found alive.
Dominique Alzeari, assistant prosecutor at Perpignan who is partly in charge of the investigation, told AFP there was "no hope of finding survivors".
A spokesperson for the Marine Department in Toulon also told
Le Monde
newspaper: "There are no survivors."
The search
Debris from the plane was spread over hundreds of metres from the scene of the crash, the mayor's office in Canet-en-Roussillon said.
First Officer Sandrine Parro of the Regional Operational Centre for Monitoring and Rescue (CROSS) for the Mediterranean told AP five launches, two helicopters and a patrol plane were dispatched to the area of the crash.
One hundred police and firefighters also attended before the search was suspended at midnight local time.
AFP said 20 specialist divers were involved in the search and that French navy ships were looking for the plane's black box - which records flight information.
Six French and two German aviation accident investigators were being sent to assist.
A minehunter was also sent to the scene to help search for the aircraft's blackbox, but had been hindered by a heavy swell, local newspaper
L'Independant
reported.
The French transport minister Dominique Bussereau would visit Perpignan to speak to rescuers, police, the French civil aviation authority, the federal prosecutor and EAS, the paper said.
Mr Bussereau confirmed an investigation into the cause of the crash had already begun.
Erebus anniversary
The crash comes exactly 29 years after the Mt Erebus disaster, when Air NZ flight TE901 flew into Antarctica's highest mountain killing 257 people.
Mr Fyfe said the anniversary added a new dimension to today's tragedy, which was already poignant for Air New Zealand staff.
"Naturally, this is an extremely difficult time for us all and the full resources of the airline are being put into investigation."
The Airbus A320
Airbus said the aircraft, delivered in July 2005, had accumulated approximately 7000 flight hours in some 2800 flight cycles. Around 1,960 A320 aircraft are in service with 155 operators around the world.
Air New Zealand owns 10 Airbus A320s and leases two more. They are used on its Tasman and Pacific Island routes and seat around 150 passengers.
The list price of an A320 is around NZ$100 million.
The A320 has had a good safety record since it began flying in 1988. The aircraft is used in more than 70 countries.
One of the worst accidents involving an A320 occurred last year in Sao Paulo, Brazil, when a TAM plane overran the runway on landing, striking an office building. All 181 passengers and six crew on board plus a further 12 people on the ground were killed
- NZHERALD STAFF, AP, NZPA,