Air New Zealand has warned that pay rises for its workers could be curbed if tough times in the industry persist, and that it will be looking to trim staff numbers by attrition.
The airline's chief executive, Rob Fyfe, says he and senior management will be the first to feel the squeeze with their salaries frozen for a year, while others will earn less through the loss of short-term incentive bonuses.
Airlines worldwide are grounding surplus aircraft and cutting staff numbers as they are caught between rising fuel prices and in some cases declining passenger numbers.
In a memo to staff Mr Fyfe says he has challenged each division to identify non-essential activity and to cut staff numbers through attrition. He does not say what scale of job cuts is being targetted.
Mr Fyfe says that while the company will continue to try to achieve fair pay settlements with unions, it will become increasingly hard to offer increases in line with inflation if financial conditions continue to worsen.