Air New Zealand subsidiary Safe Air is to lay off about 100 workers from its Blenheim maintenance company after problems with a Defence Force contract.
The airline says it has been forced to act because of the postponement of a contract for Safe Air to upgrade Royal New Zealand Air Force C-130 Hercules.
The work was due to have been done under contract to Canadian company SPAR Aerospace.
The first of two Hercules were sent to Texas in 2005 for upgrade work, but computer software problems affecting flight management and auto-pilot systems are taking months to solve.
SPAR notified Safe Air of an indefinite postponement to the programme on 21 December 2009, Air New Zealand said in a statement. There had been delays in the delivery of the Hercules for major upgrade work.
Air New Zealand said if it does not lay off about 100 workers in Blenheim, the jobs of another 250 workers there will be at risk.
It said it had worked hard to mitigate the effects of the delays, including trying to find opportunities for Safe Air staff in Blenheim to work in other centres.
Defence Minister Wayne Mapp said on Tuesday he is trying to get to the bottom of contract problems and the upgrading work in the US was scandalously late.
Mr Mapp told Checkpoint Safe Air cannot start its contract on the three remaining Hercules in New Zealand until the aircraft in the US have been returned.
A minimum number of Hercules must be available for critical tasks such as earthquake, tsunami and hurricane work.
Mr Mapp said a project director had been sent to Texas to closely supervise the Hercules upgrade and work on New Zealand Air Force Orions, which are also being updated.
The minister said the Air Force will work with Safe Air to see if standard maintenance work can be brought forward on other aircraft to help save jobs, but this will take some negotiation over the next few weeks.
Union wants answers
Engineering, Printing and Manufacturing Union national secretary Andrew Little on Tuesday said he wants answers from the Defence Ministry, which awarded the contract to the Canadian company.
"We're very keen to explore with the Minister of Defence just what the problems are with it. These are New Zealand aircraft that they're working on - I would've thought that we'd want to ensure that as much work as possible on the aircraft is done here in New Zealand."
Mr Little said redundancies are expected to be finalised in March.
Marlborough Mayor Alistair Sowman said the lay-offs will be damaging to the community, with people likely to be forced to sell their homes and children to leave their schools.
