Air New Zealand Extends International Capacity Reductions

Air New Zealand announced today that the airline has reduced its international capacity through to the end of September 2003, following a longer term analysis of forward bookings based on the continued general downturn in demand for travel on some international routes, in particular to those Asian countries affected by SARS.

This means that service cancellations and the move to smaller aircraft previously announced for May and June have been extended to incorporate the months of July, August and September, and some new cancellations have been introduced to Singapore and Taipei services.

These changes represent a further 2% reduction in total available capacity across the airline's international network (as measured in available seats per kilometre) for the end of the 2003 financial period. The capacity reductions for May - September 2003 represent 8% of the total available international capacity for this period.

Air New Zealand's Managing Director and CEO, Ralph Norris emphasised that this move was a prudent business response to a clearly changed air travel environment due to SARS.

"While we are optimistic that the public's confidence in flying to Asian destinations will be restored over time, this recent decision is designed to reduce costs by more efficiently utilising our aircraft, as well as providing more clarity to our customers planning travel in the next few months, and more certainty for our staff.

"As this move signals a longer term reduction in services, we have closely looked at our resource needs for the period, and are confident that we have the ability to implement a number of staffing options - none of which necessitate redundancies at this point.

"These options cover a range of accepted HR practices including staff leave options, reducing overtime and a freeze on recruitment.

"Bookings on our Los Angeles and London sectors remain strong, and our domestic, trans-Tasman and Cargo operations are essentially unaffected by SARS,' said Mr Norris.

Air New Zealand has deferred the introduction of an additional Boeing 767-300 aircraft planned for December 2003, but remains committed to the introduction of its new A320 fleet.

For some routes such as Hong Kong and Taiwan, the current adjustments to Air New Zealand's international schedule are in many cases returning to capacity levels provided by the airline at the same time last year.

Percentage capacity reduction on a route by route basis are: