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Last Updated: Friday, 24 February 2006, 03:56 GMT
NZ airline announces new job cuts
Air New Zealand plane
New Zealand's flagship airline has announced fresh job cuts as it tries to get to grips with soaring fuel costs.

State-owned Air New Zealand is to lose 470 jobs from the 1,890-strong workforce at its corporate and management structure.

The airline plans further cost-saving measures that could lead to the outsourcing of aircraft cleaning and engineering services.

The carrier's fuel costs have risen 36% over the past six months.

'Brutal business'

This was despite the airline's efforts to limit exposure to rising prices by hedging its fuel costs.

We have been running fast but sliding backwards
John Palmer, Air New Zealand chairman

Higher fuel costs contributed to a sharp fall in after-tax interim profits, which dropped 55% to NZ$46m ($30.5m).

The airline says the restructuring will save it $30m a year although it will incur about $10m in redundancy costs.

"The result we have delivered is not a satisfactory financial performance," said chairman John Palmer.

"In this brutal business we have been running fast but sliding backwards and the obvious reason for this is the record increases in jet fuel prices."

Fierce competition on routes between New Zealand and Australia has made life difficult for the airline although it said traffic levels had risen 4% over the past six months.

The New Zealand government controls 80% of the airline's shares.

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