Air New Zealand is cutting deeper into its work force to stay ahead in a "brutal" aviation industry facing sustained high fuel prices.
The airline today reported a 55 per cent fall in first-half net profit to $NZ46 million ($A41.26 million) and announced another 470 jobs would go, this time at its corporate head office.
Executives said the profit was savaged by fuel costs blowing out by NZ$174 million or 36 per cent in the six-month period, labour costs increasing by $NZ37 million and fleet transition costs of $NZ35 million.
That detracted from growth in yield and traffic in the half of $NZ136 million.
"In this brutal business environment we've been running fast but sliding backwards," chairman John Palmer said.
"Globally there's a surplus capacity in the airline industry. The consensus is that high fuel prices are here to stay," he said.
"The bottom line for us is our costs must fall further next year."
The target this time is Air New Zealand's corporate staff, who will decrease from 1,890 people to 1,420 over the next year at a saving of $NZ45 million per year.
The move came after 300 Air New Zealand engineers kept their jobs in a union-management deal last night which sacrificed 200 other positions.
The jobs of about 100 cleaners, meanwhile, are being outsourced.
The cuts in market, accounting, finance, human resources and sales staff announced today would mostly take place in Auckland, with a few overseas employees affected.
"The reality is that staff costs are certainly one of the biggest controllable costs within our business. "We believe we can stay ahead of the curve. What it takes is some very tough decisions to say as input costs increase in one part of your business you have to be able to make cost savings in others."
In total the airline predicts $NZ100 million in cost savings this financial year and $NZ115 million in the following 12 months.
The airline is maintaining its full-year forecast of $NZ140 million in profit before unusuals and tax but Fyfe said had not made provisions for an expected $NZ14-15 million in redundancy costs this half caused by the job cuts.
Air New Zealand made a $NZ235 million profit before unusuals and tax in the 2004/05 year, with a net profit of $NZ180 million.
Plans to cooperate with Qantas within competition regulations in the cut-throat Tasman market have been put on the backburner, Fyfe said.
"They've gone at a slower pace than I would like and I think that Qantas and ourselves are getting on and pursuing our own strategies and continuing to talk," Fyfe said. "We're both making improvements on the Tasman."
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