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AIR NEW ZEALAND: Workers Okay Pay Cuts to Save Jobs

Troubled Company Reporter, Apr. 5, 2007 

Majority of Air New Zealand's ground staff have voted to accept pay cuts in return for keeping their jobs, ABC Radio Australia reports.

The airline's workers voted by ballot to end a dispute whether the 1,700 jobs under ground-handling services stay within the airline or are outsourced.

According to, the airline planned to outsource to Spanish company Swissport some of the ground jobs if its workers did not agree to the pay cuts.  ABC Radio says the loss would have been up to 400 jobs.

Those who agree to stay on for less money will be offered a one-off US$2,500 incentive payment, ABC says without citing its source.

The airline reportedly aims to save US$70 million over the next five years by streamlining ground-handling services.

                      About Air New Zealand

Based in Auckland, New Zealand, Air New Zealand is the country's flag air carrier, with domestic and international passenger and freight operations, and an aviation engineering business. 

As reported in the Troubled Company Reporter - Asia Pacific on Sept. 2, 2005, Moody's Investors Service affirmed its Ba1 issuer rating on Air New Zealand Limited after the airline announced its annual results for FY2005.  Air NZ's rating reflected its dominant position in the New Zealand domestic market, with around 80% market share, and the profitability of domestic operations following their restructuring to a low-cost network model.  Also supporting Air NZ's rating was its solid liquidity position, with cash balances of NZ$1.071 billion held as at
June 30, 2005.

However, while Air NZ has a solid position in New Zealand and other parts of the international network are performing well, intense competition on trans-Tasman routes has resulted in it being unprofitable for Air NZ.  International competition also limits Air NZ's ability to expand.  Its management is also aware of the airline's vulnerability to external shocks and the actions of key competitors.

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