Air New Zealand is "planning to be a domestic airline with limited international services"

Air New Zealand has started the "painful process" of slashing its workforce with overseas staff first to face losing their jobs.

The airline is "planning to be a domestic airline with limited international services".

New Zealand Herald reports a third of the airline's 12,500 staff may go as the impact of COVID-19 slashes the airline's revenue and will be a test of years of a collaborative approach to labour relations.

In an email sent to staff last night Chief Executive Greg Foran confirmed reports of major job losses following the revenue plunge from close to $6 billion a year to $500 million.

Foran said the airline had cut more than 95% of its flights in New Zealand and around the world and warns that staff cuts maybe even more drastic.

The only flights remaining are in place to keep supply lines open and transport options for essential services personnel.

The airline is in the final stages of finalising its domestic network which could fall from 20 centres to close to half a dozen.

Foran also said Air New Zealand's financial position as demand has almost totally collapsed.

Before COVID-19 wiped out global air travel, the company had annual revenue of around $5.8b.