Coronavirus: Air New Zealand brings in more cuts to save jobs

Air New Zealand chief executive Greg Foran says close to 4000 staff face a salary freeze. Photo / Michael Craig

Air New Zealand has outlined more cost saving measures to "minimise redundancies".

The airline's chief executive Greg Foran has told staff the business would take all possible steps before having to consider laying off any of its 12,500-strong workforce.

''I am conscious that we have many Air New Zealanders who live on tight budgets and we are doing all we can to ensure, where practicable, incomes are maintained.''

As a result of flying fewer customers, the airline was now entering a phase where it didn't require as many staff right across the business, whether that was in airports, operating and maintaining aircraft or in support functions, including head office, Foran said.

He's taking a 15 per cent pay cut, the rest of the 10-member executive remains on a pay freeze and today he said salary increases would be deferred for nearly 4000 staff on individual employment contracts.

''As part of the overall effort to minimise redundancies, we are investigating redeployment of staff who may be surplus in their area of work to other parts of the airline that have seen an escalation of activity as a result of the capacity cuts, such as the contact centre, customer care and group shared services managing refunds.''

The airline industry has been rocked by the pandemic, with estimates that it will lose $180 billion in annual revenue - a figure that is likely to be conservative now the United States has put a one-month ban on flights to Europe.

The range of measures that Air NZ is implementing include:
• A hiring freeze on non-critical roles
• Promoting, encouraging and (in some cases) directing staff to take annual leave
• Encouraging voluntary unpaid leave opportunities and allowing the use of staff travel for those taking this up
• Offering part-time flexi-hours
• Increasing the ability to purchase more flexi-leave to enable leave without pay
• No further discretionary spending on company credit cards until further notice
• Deferral of non-critical capital projects and discretionary business initiatives
• Reviewing purchase terms with suppliers

The airline has slashed its network by 10 per cent and as a result of uncertainty has suspended its full-year earnings guidance.

''As the revenue reduces, it's important that we move rapidly and effectively to align costs with revenue. If we lean in hard now, then I know we will come out stronger and fitter when this event is eventually behind us.''

During the week the executive has met senior leaders across the airline to hammer out cost saving measures and, where possible, finalised some decisions quickly.

''The reality we face today is different than what we experienced with both Sars and the global financial crisis," said Foran. "It's also difficult to predict where this goes and how long it is with us, so we all need to be flexible and thoughtful.''

Airlines operating in New Zealand have got a break after rules covering airport slots were relaxed. Under existing rules, airlines must use 80 per cent of slots during one season to ensure they are allocated them the following season.

Slot Co-ordination NZ said due to the reduction of global travel demand, airlines operating to this country will be granted an exemption from the 80/20 rule.