KEY POINTS:
Air New Zealand chief executive Rob Fyfe has told staff there may be "saboteurs" in their midst who set out to damage the business.
Mr Fyfe made his comments in a confidential message to staff after revelations of its charter flights of Iraq-bound Australian troops to Kuwait and the United Arab Emirates caused a transtasman diplomatic row.
It is also understood that the airline is worried that the Australian Government's new ban on the Australian Defence Force using Air NZ might affect the tens of millions of dollars of ongoing engineering contracts it has with ADF.
Mr Fyfe told staff he had spent most of last week "grappling with politicians across the whole political spectrum and media who have been intent on using Air New Zealand as a political football".
"The most distressing part of this whole saga is that a significant aspect of the sensationalism was whipped up by unauthorised comments from our own staff.
"I don't know whether it was people seeking their '15 minutes of private fame' or, even worse, saboteurs who actually set out to damage the business that we are working so hard to build," Mr Fyfe said in the message leaked to the Herald.
The Government learned of the flights only after Investigate magazine carried a cover story about them, including claims US fighter jets escorted the flights into Kuwait.
In the Government's ensuing outrage that its airline was making money from a war it opposed, Australian Foreign Minister Alexander Downer announced that the Australian Defence Force "will no longer use Air New Zealand under any circumstances."
Mr Fyfe said the trips had never been a secret and had been featured in the in-house Crew News, referred to in an Australian aviation magazine, and there had been an Australian film crew on board.
Some staff, however, had embellished the account of the flights with "fictional accounts of fighter jets" which had been seized upon by Investigate to create a sensational story, part-fiction, part-fact - which was the catalyst for the week's events.
Mr Fyfe tells staff that the airline "did everything expected of us in informing Government officials" of the flights. The airline sought advice and received clearance from Foreign Affairs Secretary Simon Murdoch.
National suggested in Parliament yesterday that Air NZ's extensive engineering contracts with the Defence Force might be hit in the diplomatic rift. Mr Downer yesterday referred to ADF taking alternative flights but his statement last week was broader and did not specify a ban on flights only but a ban on "using Air NZ."
Air NZ shareholding minister Michael Cullen's office said the Government believed the ban was on flights only. Mr Downer's office referred inquiries to Defence Minister Brendan Nelson, who could not be contacted.
Air New Zealand has a wholly owned subsidiary, Tasman Aviation Enterprises, based in Australia which is a key contractor to the RAAF Base Amberley. It also paints ADF aircraft at Richmond.
Dr Cullen, meanwhile, said Mr Downer's response last week had been "over the top" and suggested he may have been motivated by apple growers in his home-patch of Adelaide, who want to keep out New Zealand apples.
Defence Minister Phil Goff said he had known Mr Downer a long time and "sometimes he goes off the deep end a little."
