Air New Zealand has cut 5 percent of flights and will start to consolidate other routes after the July school holidays, chief executive Nikhil Ravishankar says.
It comes as the airline is expecting a full-year pre-tax loss of between $340 and $390 million due to the soaring cost of jet fuel.
Talking to RNZ's Checkpoint on Thursday, Ravishankar said domestic demand was already soft before the war in Iran, and the crisis had only made it more acute.
"Cost-of-living challenges are real and so where we've gone in with price increases, we are starting to see the fact that we are getting to the limits of certain markets and the ability to absorb those costs.
"So, we're being very thoughtful about what we do with price increases."
He said the airline was eyeing up further cuts to flights after the July school holidays.
Air New Zealand had already cut 5 percent of its flights in response to the war, which had triggered "genuinely unprecedented" fuel prices but ruled out a request for financial assistance from the government.
"We are paying over double what we normally pay for fuel. Recovery will have a long tail. But it all depends on when the conflict will end and how the fuel price recovers."
Ravishankar said reducing the frequency of flights, not routes, was the goal - for example instead of flying twice daily between destinations, the airline might fly once.
"That's by and large frequency cuts, so we're cutting flights that are middle of the day, non-peak flying."
He said roles could be cut; however, losses would not be to frontline staff, but to support staff.
Ravishankar said it was yet to be finalised which flights would be lost, but the airline was targeting long-haul, international routes between August and October.
He said there would be fewer cuts on regional and domestic routes and expected customers would be advised in June.
A London route will not take off next year, as originally planned.
Ravishankar said the sharemarket had been informed Air NZ would preserve all costs associated with supporting customers.
He said the first priority was to ensure the airline continued operating a safe, punctual, and reliable service at an affordable price.
"There are a lot of costs that go into running 500 flights a day... so those costs, we're making sure that they are right, but we're protecting that.
"But what we're also doing is going through every single line item in the business and making sure any of the costs that we can live without for now - as we're dealing with the crisis, that we... remove those costs from the business."
Ravishankar said despite the difficulties the airline was facing, he loved his job and the role was a privilege.
"This is one hell of an airline. It's one of the great New Zealand iconic brands, and even today one of the most respected airlines in the world.
"The plans that we have in place ensure New Zealand has a world-class airline into the future."
