WELLINGTON (New Zealand) - AIR New Zealand will freeze the salaries of about 1,000 senior staff and limit pay hikes for lower paid workers as demand for travel continues to languish amid the global recession.

Chief executive Rob Fyfe said on Monday the airline is also looking at more cuts to domestic and international flights, with the results of its investigation expected within two weeks.

Some 200 workers have already been made redundant at the national carrier, which is reducing labour costs through leave without pay, flexible working arrangements, overtime cuts and not replacing staff who leave. Top executives have had their pay and bonuses frozen since July 2007.

The new salary freeze affects managers and other staff earning more than 80,000 New Zealand dollars (S$68,000) a year and who don't fall under a contract negotiated by unions - about 9 per cent of the airline's 11,000 employees.

From July 1, maximum pay increases for lower-paid workers will be limited to between 1 per cent and 2.5 per cent depending on salary.

Air New Zealand has reduced capacity on domestic and international routes and cut flights on some routes to control fuel costs and cope with falling passenger demand.

The national carrier has reported a fall of up to 18 per cent in long-haul international passenger numbers, a decline of about 10 per cent in domestic customers and a sharp falloff in cargo traffic.

Air New Zealand was rescued from bankruptcy by a billion-dollar government financial package in September 2001 that left the government owning nearly 80 per cent of the carrier. -- AP