16 Mar 2020

Union seeks a voice as Air NZ prepares to axe 3500 jobs

9:18 pm on 16 March 2020

The E tū union has started meeting with members as it tries to influence Air New Zealand and save as many jobs as possible at the troubled national carrier.

Air New Zealand plane.

The Covid-19 crisis is being described as the biggest downturn in world aviation since World War II. Photo: 123RF

Earlier today Air New Zealand placed itself in a share trading halt and announced widespread cuts to its international and domestic services because of the worldwide impact of Covid-19 on its services.

It announced it was cutting its long haul capacity by 85 percent, suspending flights between Auckland and Chicago, San Francisco, Houston, Buenos Aires, Vancouver, Tokyo Narita, Honolulu, Denpasar and Taipei from 30 March to 30 June.

The domestic network capacity would be reduced by about 30 percent in April and May, but no routes would be suspended.

The airline said it was likely it would need to reduce its workforce by 30 percent as the effects of Covid-19 take their toll on the aviation industry.

This could mean up to 3500 employees potentially may lose their jobs

It's being described as the biggest downturn in world aviation since World War II.

As a result of the downturn in travel, the company said it would review its cost base and begin the process of redundancies for permanent positions, and was working with four unions representing 8000 members of its workforce of 12,500.

President of Airline Pilots Association Andrew Ridling said these are extremely trying times.

"This afternoon they've told us that across the business we've basically gone from a $6 billion business to arguably a $1 billion business and that's going to entail up to 30 percent job cuts across the board."

The company and the unions have been meeting this afternoon.

E tū aviation organiser Savage said while they were unhappy with the news they were not surprised.

"I think all New Zealanders are going to face the effects of Covid-19 and the possible recession that's going to happen. Aviation workers are at the frontline. Air New Zealand workers are experiencing it right now."

The union is disappointed the workers weren't the first to know that 30 percent job losses are being considered.

He said meetings were being set up with union members in each business unit "so that workplace leaders can hear first-hand and understand what that might look like in their area and what can be done to try and avoid or minimise job losses".

Overseas, other airlines are also taking drastic action. In Australia, Qantas has cut its international capacity by 25 percent over the next six months. Analysts expect the move to have a significant effect on Qantas's business.

Last week British Airways announced it is also grounding flights like never before and laying off staff in response to the outbreak.

Its chief executive Alex Cruz described the industry as facing a crisis worse that 9/11.

British Airways passenger aircraft are pictured at London Heathrow Airport, west of London on May 3, 2019. -

British Airways is also cutting staff and grounding flights. Photo: AFP

At the weekend American Airlines said it was grounding almost all its largest planes and curtailing 75 percent of its international flights until early May.

Aviation analyst for Forsyth Barr Andy Bowley said there would be redundancies at Air New Zealand but the airline's response would need to be carefully managed.

"The company will want to be well positioned for any ultimate recovery and by making any large-scale redundancies you limit yourself in terms of how well you can respond to the upside through that recovery phase."

He said Air New Zealand would fare better than some airlines because of the likelihood of funding from the government, its majority shareholder.

"But in the context of Air New Zealand's pretty favourable market position in New Zealand where it's reasonably dominant domestically and it has reasonably dominant positions on its international routes, what you tend to find in downturns generally through economic cycles, is that the stronger businesses if they play their cards right they tend to strengthen."

Auckland Airport's shares opened nearly 13 percent down following this morning's update to the market but recovered slightly.

An increase in air cargo to China may prove a sign of improvement in the sector battered by the Covid-19 virus.

The massive disruption to international travel and trade is forcing all parts of the industry to cooperate, the airport said.

Justin Tighe-Umbers, the Board of Airline Representatives of New Zealand executive director and Adrian Littlewood, who is Auckland Airport CEO

Adrian Littlewood, right, is pinning his hopes on an increase in air cargo over the next few months. Photo: RNZ / Matthew Theunissen

Chief executive Adrian Littlewood said the higher air cargo volumes may partly offset the slide in passenger traffic.

"And I actually think that will be an important part of the ultimate recovery. Airlines can hopefully help to sustain some of those routes through air cargo providing some support as passenger markets rebuild.

"This is certainly going to be a very challenging time for the industry and it's really important that we just work together to try and help each other through."

Unions say government support for Air New Zealand and the wider aviation sector will be vital for their survival.

As Covid-19 spreads around the world, it can be daunting keeping up with the information. For RNZ, our responsibility is to give you verified, up to the minute, trustworthy information to help you make decisions about your lives and your health. We'll also be asking questions of officials and decision makers about how they're responding to the virus. Our aim is to keep you informed.

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