Air NZ unveils new staff pay freeze - more flight cuts to come

Air New Zealand will freeze the pay of salaried staff earning more than $80,000 as it looks to cut costs.

The airline's chief executive Rob Fyfe has told staff the cuts will apply to about 1000 of its 11,000 workers.

And the slump in demand for air travel has prompted further reviews of regional, transtasman and long haul routes.

"I expect to be able to share some of the outcomes of this work within the next fortnight. One of the most critical elements in our success of so far managing the economic storm has been the ability to match capacity to demand," he said.

The pay freeze will apply to those on individual contracts for a year from July.

This freeze does not affect collective employment contracts already in force or pay increases committed to within those agreements.

Guidelines for increases for staff on less than $80,000 range from 1 per cent to 2.5 per cent.

Air New Zealand has cut international capacity sharply already and it will fall at least 14 per cent in the current financial year.

While this saved on fuel, the airline was doing what it could to cut costs on the other most significant cost - labour - by natural attrition, leave without pay, use of excess leave balances, more flexible working arrangements where possible and reducing overtime.

"We continue to look at all areas where we can reduce labour costs, short of making further positions redundant wherever possible," Fyfe said.

Air New Zealand laid about 200 staff early this year but has resisted making widescale cuts other airlines have.

Fyfe said in his message to staff he wanted Air New Zealand to be well resourced to take advantage of new growth opportunities as they emerged.

"Those that are adopting more of a scorched earth policy and making hundreds or thousands redundant will struggle to 'spool-up' and pursue these opportunities at the speed that we will."