Air New Zealand is to freeze the pay of staff earning more than $80,000 to cut costs in the wake of a fall in air travel.
The year-long pay freeze takes effect in July, and will apply to employees on individual contracts and not to staff on collective contracts.
Air New Zealand says this will affect about 1,000 of its 11,000-strong workforce and will reduce the pressure to cut staff numbers.
The company has also set guidelines on pay increases for those on individual contracts of less than $80,000.
It will limit raises to an average of 2.5% on those earning up to $50,000, 2% on those between $50,000 and $70,000 and 1% on those between $70,000 and $80,000.
Air New Zealand, in common with other airlines, has struggled with the fall in air travel as households defer holiday plans and firms cut back staff travel because of the recession.
Chief executive Rob Fyfe says Air New Zealand is also looking to cut more flights on all its routes.