Air NZ to slash almost 500 more jobs as profit plummets

Air New Zealand today announced a 55 per cent fall in first half profit and unveiled plans for a major head office restructure - with a further 470 possible redundancies - as soaring fuel prices continued to bite.

The national carrier posted a net profit after tax of $46 million for the six months to December 31, compared with $102m a year for the same period a year earlier.

Air NZ said it expected to save $45m a year from a new round of layoffs that will bring total redundancies to nearly 780.

Despite the changes, chief executive Rob Fyfe said the company was sticking to its full year profit forecast of $140m before unusual items.

The company expected to book $14-15m in redundancy charges in the second half, but had not accounted for those charges in its full year forecast, Mr Fyfe said.

The "significant" management restructure to hit the marketing, human resources and finance sectors in the Auckland head office were designed to make the carrier a more nimble competitor in the increasingly difficult aviation market.

Around 470 positions would be evaluated as part of the restructuring process, Mr Fyfe said. Final numbers were not immediately known, but the aim was to reduce Air NZ's corporate division from over 1800 to around 1400.

Staff would be asked to apply for new positions with total job losses becoming clearer by the end of April.

The news came as Air NZ engineers last night agreed to a new employment package of pay and shift changes designed to preserve 300 jobs from outsourcing offshore. About 200 jobs will go under the scheme, designed to save $48m a year.

Air NZ earlier this month announced plans to outsource its aircraft cleaning operations, with a loss of 114 jobs.

Shares in Air NZ, which declared an interim dividend of 2.5cps, were steady in early trading at $1.32.

Air NZ said staff costs were one of the few variables the airline could control in a climate of fierce competition and soaring aviation fuel costs.

"In this brutal business environment, we've been running fast, but sliding backwards," chairman John Palmer said.

He said the airline was reluctant to hide behind record increases in jet oil prices, which saw its fuel bill rise by $174m in the first half.

"Globally there is a surplus capacity in the industry and the consensus is that high fuel prices are here to stay. The bottom line for us is that our costs must fall further next year," Mr Palmer said.

"We are well advanced in changes to our engineering business that will give us a globally competitive cost base, and last night's vote outcome is a very important step in that process."

Today's announcements were designed to ensure Air NZ was the right size to compete in the "aviation market of tomorrow".

The focus was on making the airline more attractive for customers, Mr Fyfe said, with new routes, a refreshed brand and refurbished aircraft.

Air NZ booked a $5m negative currency impact in the first half. While previously it has benefited from the high New Zealand dollar in offsetting fuel costs, the airline said the currency was now having a negative impact on tourist numbers.

Air NZ flew 6 million passengers in the first half, up 4.5 per cent on the same period last year.

Group capacity, as measured by available seat kilometres (ASKs, rose 4.2 per cent to 17.1b ASKs.

Group traffic, as measured by revenue passenger kilometres (RPKs), increased 4.2 per cent to 13b RPKs.

Total operating revenue rose 7.7 per cent to $1.9b.

- NZPA