Air New Zealand will cut 441 jobs after profits fell 61 per cent over the first half of the financial year.
The carrier today reported net profits of NZ$38 million (A$29.9m) for the six months ending December 31, down from NZ$98 million for the same period the previous year. Revenues were up 2.5 per cent to NZ$2.3 billion but could not keep pace with rising fuel costs and weak demand for long haul international travel.
“The price of jet fuel has doubled over the last three years but a weak global economy is hindering our ability to pass on these higher fuel costs to passengers,” Air NZ CEO Rob Fyfe said in a statement. “Therefore we have been moving quickly to adapt, to gain greater efficiencies and to develop into a stronger more profitable business.”
Fyfe said 193 jobs had already been cut through non replacement of employees or non renewal of contracts, with a further 73 to be lost to attrition by the end of the financial year. The remaining 175 job cuts will come through redundancies, he said.
The job losses are part of a larger plan to improve the airline’s profitability by NZ$195 million by FY15, Fyfe said. The plan also includes expanding alliances with other airlines, strengthening its international focus on routes in the Pacific, and the recent launch of the carrier’s “OneSmart” prepaid debit and travel card.
Widely credited with stewarding the airline’s product-led renaissance, Fyfe has announced plans to leave Air New Zealand by the end of 2012. A replacement has yet to be named.
Separately, Air New Zealand confirmed that is has converted two options for Boeing 787-9 Dreamliners, bringing its total order of the fuel efficient aircraft to 10. The carrier said it has also agreed to new terms with Boeing that will see the first 787s delivered in the second quarter of 2014, more than three years later than originally expected.
“Despite the extremely frustrating and costly delays, we strongly believe the 787-9 is the right aircraft for Air New Zealand and worth the wait,” Fyfe said.