Air New Zealand has downgraded network growth targets and delayed the delivery of new aircraft following a two-month review prompted by its reduced earnings guidance.
The dual-listed carrier, which also launched a fresh $60 million cost-cutting initiative and an overhaul of its long-haul economy cabins, today said it is planning for network growth of three to five per cent over the next three years.
That's down from the previously planned five to seven per cent.
The carrier launched the review in January after downgrading its full-year pre- tax earnings guidance to between $340 million and $400 million, from between $425 million and $525 million.
Chief executive Christopher Luxon said the airline, which last month reported a 35.4 per cent fall in first-half profit, would improve revenue growth, capital efficiency, operating costs and the customer travel experience into 2020 and beyond.
"The actions we are announcing today are focused on re-aligning our business to ensure a return to earnings growth in the lower growth environment," Mr Luxon said.
"Air New Zealand is experienced at adapting to changing macro environments, and the actions outlined in the business review today will ensure the business is more dynamic, increasingly competitive and financially resilient for the future."
Air New Zealand has delayed by between one and at least four years the delivery of six new aircraft.
However, it will launch new direct services between Auckland and Seoul in November and increase the frequency of Auckland-Taipei and Auckland-Chicago flights to up to five times per week from December.
Mr Luxon said Air New Zealand was ensuring that each of its international aircraft are directed at strongly profitable routes.
"We are putting extra effort into lifting the performance of some routes that we feel are not meeting their potential, while refocusing our assets on those routes which are performing ahead of expectations," Mr Luxon said.
"Our No.1 priority is optimising our network mix to maximise profitable growth."
Air New Zealand's ASX-listed shares rose as much as 3.5 per cent today and, at the time of writing, were still up 3.0 per cent at $A2.38.