UPDATED: Air NZ culls 100 jobs at subsidiary Safe Air

Air New Zealand is culling about 100 jobs from its Blenheim-based subsidiary, Safe Air and the future viability of the company may be in doubt.

In a statement issued this morning, Air New Zealand group general manager technical operations Vanessa Stoddart said the job losses were a result of 18 months of delays in the arrival of the Royal New Zealand Air Force C130 aircraft.

Ms Stoddart told NBR it was also re-negotiating its Ministry of Defence maintenance contract.

The company had a contract with Canadian company SPAR Aerospace for major upgrade work on four C130 aircraft, awarded in 2005 in conjunction with the Ministry of Defence.

Air New Zealand said Safe Air increased its workforce (now 351) and invested in equipment and facilities for the planned arrival of the first aircraft in August 2008.

However, on 21 December 2009, SPAR told Safe Air the programme had been indefinitely postponed.

"Not only has that put the financial position of the business at risk, it brings into question the viability of the company's maintenance work."

It was now re-negotiating the Ministry of Defence contract for maintenance work, which was expected to take about three months, she said.

If the contract was not successfully re-negotiated, "we'll need to look at what that means for Safe and its staff".

Planned work on the Hercules aircraft included major structural refurbishments (including the replacement of the centre wing) and modifications to avionics systems (including a new “glass” flight deck, navigation and communications suites and night vision).

Ms Stoddart said three or four years ago, that contract, along with the upgrade of some P3 aircraft and the Ministry of Defence maintenance contract, had made the company a long-term viable business.

That was now in doubt, she said.

The Engineering, Printing and Manufacturing Union (EPMU) said it was a "major blow" to Blenheim.

EMPU said it was understood the work would now be conducted by SPAR Aerospace in Canada.

EPMU national secretary Andrew Little said the union would work closely with its members and with Air New Zealand to make sure as few members are displaced as possible.

“These are highly skilled, relatively highly paid jobs and any redundancies will be a huge blow to the Blenheim community and to the local economy.

“The EPMU will be working to save as many jobs as possible and to make sure the process is fair.

“We expect to get more detail over the next couple of weeks and we’ll be working with our members to make sure this is done properly.”

The EPMU represents 200 members at Safe Air.

Ms Stoddart said the company had worked hard to mitigate the impact of the lengthy delay, including transferring Air New Zealand aircraft maintenance to Blenheim to keep staff employed.

It also offered staff work at Air New Zealand’s Auckland and Christchurch engineering bases, she said.

“However, due to the uncertainty of work in the pipeline created by the SPAR notification, we have now reached the point where we need to reduce the workforce by around 100 people. If we don’t make this tough move, Safe Air will incur significant losses that would put the jobs of the remaining workforce in jeopardy.”

Consultation with affected staff was underway and would conclude in March, when a final decision will be made on the exact number of job losses.