Origin Pacific and Tongan airlines face tough times

Nelson airline Origin Pacific is cutting staff numbers and reducing flights after losing its partnership with Qantas.

Meetings were held with the company's 450 staff in Nelson, Christchurch, Wellington, and Auckland on Thursday telling them redundancies were likely.

And financial woes forced stranded passengers to scramble for other flights after Royal Tonga Airlines' only plane was grounded at Auckland Airport.

The Boeing 757, leased from Royal Brunei Airlines, was understood to have been prevented from flying on Thursday afternoon. It was due to leave for Tonga yesterday morning.

It was not clear how many passengers were stranded by the airline's problems but Kalafi Moala, editor of the Auckland-based Times of Tonga newspaper, said about 200 passengers were likely to be waiting for the plane in Tonga and about the same number stranded here.

Origin Pacific managing director Robert Inglis said the viability of his company depended on cutting costs.

"We have had to substantially revisit our business in the wake of the termination of the Qantas codeshare arrangement," he said.

That had resulted in a 40 per cent loss in revenue, he said.

Inglis said the cost-cutting would take one 64-seat aircraft out of use, and significantly reduce flight schedules for three other 29-seaters. No routes would be cancelled at present.

"As a responsible operator there is little more we can do other than now reduce our expenditure to match our revenue."

The Engineering Printing and Manufacturing Union, which represents more than half Origin's staff in Nelson, said staff were shocked.

"Obviously people still have a lot of questions that the company will endeavour to answer," said Nelson area organiser Alan Clarence.

The union had been told on Monday that redundancies were possible, and had negotiated a redundancy agreement, signed off by the company on Wednesday, he said.

Inglis declined to say how many jobs would go but said they would be "relatively small numbers".

Some administration staff based in Nelson would be made redundant, and some flight attendants might also lose their jobs, he said. No pilots employed directly by Origin would be affected at this stage, he said. A third of the staff are contractors.

Air New Zealand chief executive Ralph Norris lifted Origin staff spirits last night when he offered jobs to redundant workers, saying his company's "highly successful" Express Class continued to grow.

Since introducing the cut-price service, reducing domestic fares by up to 50 per cent, Air New Zealand passenger numbers had grown by 40 per cent, Mr Norris said.

Mr Inglis said the only ports unaffected by the schedule changes would be Nelson and Blenheim.

He blamed the loss of the Qantas codeshare agreement for much of the airline's woes.

"We always expected it would be long term. We thought we would have at least a year's notice of the termination of Qantas which would have given us time to build our revenues back independently."

Royal Tongan's troubles came as no surprise to the industry or Tongan nationals after its financial woes were revealed in a report by accountants KPMG in June last year.

The airlines' budgeted loss for the year ending this June was $13.2 million, the report said, but industry sources put it at up to $47.5 million.

New Zealand High Commissioner for Tonga Warwick Hawker said Air New Zealand had commissioned a special concessional airfare "so we've made arrangements for people who do get caught".

- NZPA

Additional reporting ANNE BESTON, JOHN ANDREWS