Air Transport

Air New Zealand is likely to outsource heavy maintenance on its long-haul aircraft and engines in a move that will cost 600 jobs, but save the airline NZ$100 million ($70 million) over the next five years.

The airline has submitted the proposal to its unions and staff, with a final decision expected on 19 December. The suggestion follows a comprehensive review of Air New Zealand Engineering Services (ANZES) caused by financial under-performance at the division (Flight International, 6-12 September).

The airline had already opted for a TotalCare engine maintenance package from Rolls-Royce for the Trent engines on its new Boeing 777s and 787s rather than handling the work in-house.

Under the latest proposal, all heavy maintenance on the airline’s Boeing 747s, 767s and 777s, – the latter which start arriving at the end of this month – will be outsourced to a specialist, large-scale maintenance centre in Asia or Europe, says the airline.

The move would see around 600 jobs cut from the 2,100-strong ANZES workforce, primarily in Auckland. Long-haul aircraft heavy maintenance is no longer a viable business for ANZES in the face of increased competition from large-scale international maintenance providers, particularly in Asia, which have more competitive cost structures and are closer to their customers, says Craig Sinclair, Air New Zealand Group general manager ventures. At the same time, Air New Zealand’s own heavy maintenance requirements are declining as it starts to take delivery of new long-haul aircraft.

“As a result ANZES cannot operate a viable heavy maintenance programme solely based on Air New Zealand’s future fleet. In fact, it would have to attract a substantial amount of work from offshore to be viable, which would put us head-to-head with the large-scale operators that can match ANZES’ quality and surpass it in terms of cost and turnaround time,” says Sinclair.