Air New Zealand is further reducing capacity across its network as coronavirus reduces demand for travel, and thousands of job losses are expected

The airline has placed itself into a trading halt today to allow it time to more fully assess the operational and financial impacts of global travel restrictions.



On its long-haul network Air New Zealand will be reducing its capacity by 85 per cent over the coming months and will operate a minimal schedule to allow Kiwis to return home and to keep trade corridors with Asia and North America open. Full details of this schedule will be advised in the coming days.



Among the long-haul network capacity reductions, the airline can advise it is suspending flights between Auckland and Chicago, San Francisco, Houston, Buenos Aires, Vancouver, Tokyo Narita, Honolulu, Denpasar and Taipei from March 30 to June 30. It is also suspending its London-Los Angeles service from this week through to June.

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Chief executive Greg Foran said, based on what the airline could see on Monday, its 12,500 workforce would drop by 30 per cent. To minimise redundancies, it was encouraging staff to take annual leave, long service leave or leave without pay where it could.

The New Zealand Airline Pilots' Association president Captain Andrew Ridling said he understood it would not be a short-term measure.

"The industry is aware that, until this unprecedented situation developed, Air New Zealand would have had forecasted annual revenue of approximately $6 billion I would no longer be surprised if that forecast is reduced to around $1b," he said.

The Tasman and Pacific Island network capacity will significantly reduce between April and June. Details of these schedule changes will be announced later this week.



On the domestic network, capacity will be reduced by around 30 per cent in April and May but no routes will be suspended.

Benje Patterson, an independent economist with a focus on aviation, said he expected the Government would need to provide support for Air New Zealand in some way.

One of the biggest liabilities for the airlines would be the tickets it had sold and which people would claim on in future.

It would need to work out its cash flow needed to cover, including aircraft leases and fuel costs.

The Government would probably put more money in through a share issuance to shareholders, he said. The Government owns just over 50 per cent.

It would buy shares based on a proportion of ownership, with other shareholders offered more shares at a discount.

SUPPLIED On its long-haul network Air New Zealand will be reducing its capacity by 85 per cent over the coming months and will operate a minimal schedule to allow Kiwis to return home.

The Government would then probably underwrite the issuance, he said, and pick up extra shares other shareholders did not want to buy.

"It wouldn't want to dilute the shareholder of others shareholders without giving them the option."

In an update, Forsyth Barr head of research Andy Bowley said there were likely to be material losses for the airline both this financial year and next.



Customers are advised that due to the unprecedented level of schedule changes they should not contact the airline unless they are due to fly within the next 48 hours or need immediate repatriation to New Zealand or their home country.



Foran said while airlines face an unprecedented challenge, Air New Zealand was better placed than most to navigate its way through it.

"The resilience of our people is exceptional and I am consistently amazed by their dedication and passion for our customers," he said.



"We are a nimble airline with a lean cost base, strong balance sheet, good cash reserves, an outstanding brand and a team going above and beyond every day. We also have supportive partners. We are also in discussions with the Government at this time."

Air New Zealand A Journey to Safety will be rolled out on the airline's domestic and international fleets.

As a result of the downturn in travel Air New Zealand continues to review its cost base and will need to start the process of redundancies for permanent positions acknowledging the important role partnering with unions has in this process.



"We are now accepting that for the coming months at least Air New Zealand will be a smaller airline requiring fewer resources, including people. We have deployed a range of measures, such as leave without pay and asking those with excess leave to take it, but these only go so far. We are working on redeployment opportunities for some of our staff within the airline and also to support other organisations".

A meeting will be held with the four main unions representing Air New Zealand staff on Monday.

E tū union aviation spokesman Savage said that would provide details on which areas and roles would be most affected.

The union was mobilising in an effort to stop redundancies, he said.

Some jobs had already been lost as people who were due to start were told those positions were no longer available, he said.

A significant factor in how many jobs were lost would be what support the Govt could offer, Savage said.

"New Zealand and New Zealanders rely on aviation to keep us connected to the world. It's important the Government can do whatever it can to minimise job losses."

Airline workers were highly skilled but their work relied entirely on flight schedules, he said. "If planes aren't flying, there's no work for them."



Foran said: "I would like to thank the leadership teams at E tū, AMEA, NZALPA and Federation of Air New Zealand Pilots for the way in which they are engaging with the airline and positively representing the interests of their members. These are unprecedented times that we are all having to navigate. And it is clear that if we don't take all the appropriate measures to lower costs and to drive revenue, our airline won't be in the best position to accelerate forward once we are through the worst of the impact of Covid-19."