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The national carrier says maintenance requirements has forced it to cancel some 82 flights, affecting 14,000 customers travelling between December 10 and January 5.
Most of the cancelled flights were between Christchurch and Perth, as well as Auckland and Sydney, with limited disruption between Auckland and Tonga.
The airline said today it would begin processing changes to customer bookings this week and then contact affected passengers.
Air New Zealand spokesperson Dave Wilson said the airline had been performing regular checks on the engines since April this year and had been doing all it could to fast-track the required maintenance from Rolls-Royce, but there was a significant wait for repair services.
The airline warned there may be further cancellations.
The affected engines are installed on the airline's Boeing 787-9 aircraft.
In a statement, Air New Zealand said: "Rolls-Royce requires operators of its Trent 1000 TEN model engines to carry out more frequent maintenance due to an issue with the engine's high-pressure turbine blades. Rolls-Royce does not have any replacement engines available while maintenance work is undertaken and has advised Air New Zealand there's significant wait for repair services.
"Air New Zealand has 10 Trent 1000 TEN engines fitted to its 787-9 fleet and has been working to minimise disruption but schedule changes are now unavoidable. Further changes may also be required as the airline progresses the engine checks."
The most affected route is Air NZ's twice-weekly seasonal Christchurch to Perth service, resulting in the cancellation of 62 flights.
Air NZ said it would cancel its second daily Auckland to Perth service from 10 December 2019 until 5 January 2020, but continue to operate its 11.10am Auckland to Perth and 6.50pm Perth to Auckland services as scheduled.
Outside the Perth route, a limited number of international cancellations would also take place from December 10 to January 2, it said.
Last year, Air New Zealand engineers announced a strike notice that would have disrupted travel for 120,000 customers in the lead-up to Christmas.
Engineers and logistics workers had threatened industrial action on 21, 22 and 23 December in the dispute over pay and conditions. However, the strike was called off a week in advance.
Travel agents are expecting to be flooded with calls after Air New Zealand cancelled flights over the holiday period affecting 14,000 people because of maintenance issues with its Rolls-Royce engines.
Brent Thomas from House of Travel said it would have a huge impact on a large number of customers.
"It is an a unfortunate period, particularly over the Christmas period when so many people are travelling.
"This is going to be significant, just the number of people who are potentially impacted."
He said travellers should immediately contact their travel agent or risk missing out.
The engine problems were bedevilling airlines worldwide, he said.
"We have to stress this is because of the Rolls-Royce engines. And it's not just Air New Zealand who are impacted, there's going to be significant number of airlines around the world, and we'll be dealing with those airlines as well."
Aviation commentator Irene King said the Christmas cancellations would hurt Air New Zealand's brand.
She said while the airline could have been better at making contingency plans it was at the mercy of the backlog at the international Rolls-Royce maintenance plant.
But she said passengers would forgive the hassle of rebooking if it meant they would get to their destination safely.
"It comes down to 'how annoyed are you because this cancellation is caused by the need to ensure absolute reliability and safety with engines'."
Air New Zealand has warned there could be further cancellations as it progresses with the engine checks.