Air New Zealand freezes salaries


  • Business
  • Thursday, 10 Jul 2008

WELLINGTON (AP) - Air New Zealand has frozen salaries of senior executives, halted bonus payments and is considering slashing jobs to compensate for soaring fuel costs and sliding passenger demand, according to an internal memo leaked to the media.

Pay increases for managers will be achieved only through staff reductions or increased productivity, chief executive Rob Fyfe said in the document seen by The Associated Press.

Fyfe said he and senior management will be the first to feel the squeeze with their salaries frozen for a year.

Other managers will earn less through the loss of short-term incentive bonuses.

Another measure is the reviewing of "nonessential'' activities that may lead to job cuts, the memo said.

It was not immediately clear how many of the airline's 11,000 staff could be lost.

"There are no roles specifically under review _ any head count reduction will be through attrition,'' Operations and Services Communications Manager Tracy Palmer told The AP.

Airlines worldwide are grounding surplus aircraft and cutting staff as they are battered by rising fuel prices and, in some cases, declining passenger numbers.

Air New Zealand last week announced its fourth fare increase since early March in a bid to offset a 58 percent rise in jet fuel prices over the past six months.

Deputy chief executive Norm Thompson said with jet fuel now above US$170 a barrel, fare increases would only partially absorb the higher cost of fuel.

In May, Air New Zealand warned rising costs would drive down its annual profit by more than 23 percent.

"Air New Zealand faces one of its most challenging financial periods as tough economic conditions hit consumers around the globe,'' Fyfe said.

The national airline, 76 percent owned by the government, was rescued from bankruptcy in 2001 by a NZ$1 billion government cash injection.

Air New Zealand has 20 top executives in New Zealand who earn more than 250,000 New Zealand dollars (US$189,000) a year.

Two earn over NZ$800,000 (US$606,000) and one NZ$1.6 million (US$1.2 million).

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