The union representing flight attendants has withdrawn its notice of a four-day strike that was due to start on 8 April.
The Engineering, Printing and Manufacturing Union had advised that about 250 flight attendants employed by the airline's subsidiary, Zeal 320 Ltd, would strike for four days in the lead-up to Easter and during the holiday.
The row is over what the flight attendants are paid on the subsidiary, which mainly serves the trans-Tasman route.
Zeal 320 staff are seeking pay parity with staff employed by Air New Zealand.
Air New Zealand senior manager Bruce Parton says the EPMU has withdrawn the strike notice and the parties will return to mediation on Friday.
It says the union withdrew action after being faced with a legal injunction from the airline.
The EPMU says the full strike is off, but some level of industrial action will still occur. It says Zeal 320 staff will still not comply with paperwork or uniform standards and will refuse to go on standby.
Flight cancelled, staff suspended
On Thursday, Air New Zealand cancelled a flight from Christchurch to Sydney, citing industrial action.
The airline says Zeal 320 staff were suspended and passengers were rebooked on another service.
The company also suspended Zeal 320 workers on Wednesday who wore feather boas, wigs and stickers on flights to draw attention to their claim. It says the cabin crew were not complying with the airline's uniform rules.
The EPMU says it supports the tactic, so long as the staff were not breaching Civil Aviation regulations.
In the past, airline staff have been encouraged to wear fancy dress, including on Air New Zealand flights to Sydney's Mardi Gras.
The union says it will challenge the suspensions.
The EPMU had earlier been angered by advertisements placed by recruitment company Hudson for flight attendants who may work on the same services that would have been affected by the Easter strike.
It accused Air New Zealand of openly seeking strike-breakers. The carrier has made no comment on the advertisement.