Auckland, Feb 17 NZPA - Software bugs plaguing a $234 million upgrade in Canada of air force C-130 Hercules aircraft are behind the delays that prompted Air New Zealand to yesterday announce 100 job losses in Blenheim.

The air force has refused to accept two upgraded aircraft because of the bugs. Another was in maintenance, which has left the air force with only two operational Hercules aircraft.

The life-extending upgrade began in 2005, when the first aircraft in the fleet went to Canada. It returned to New Zealand more than four years later, still with bugs in its software and was not accepted by the air force.

After the first aircraft upgrade Spar Aerospace, which won the original contract in Canada, went out of business and the contract was taken over by L-3 Communications.

A second upgraded aircraft had the same bugs in its software, and was also rejected by the air force. It was now doing test flights at L-3 in Waco, Texas.

The bugs delayed the Air New Zealand upgrade of the other three fleet aircraft, causing the airline to announce it would have to lay off 100 staff at Safe Air in Blenheim, where the work was to be done.

The threatened layoffs have caused consternation in Marlborough and in political circles.

Defence Minister Wayne Mapp said today "legal remedies" were being considered against L-3 over the 2-1/2-year delay in delivering the aircraft to Safe Air for the upgrade work.

The Defence Ministry had worked with Safe Air and the air force to arrange other projects, and was looking to see how many of the jobs at risk could be protected through the provision of other work, Dr Mapp said.

How many that would affect and how long it would last would be known in the next few weeks, he said.

Marlborough District Council had been trying for more than a year to help Safe Air find other projects in case the contract fell through, Marlborough Mayor Alistair Sowman said.

The council and Safe Air had met Air New Zealand to explore other work, such as servicing its aircraft. Nothing had been secured, although efforts were continuing, he told the Marlborough Express.

"Our worst fears are now realised...the impact of this will be felt throughout the (Blenheim) community," Mr Sowman said.

He said New Zealand's government procurement policy, based on the commercial principle of best value for money through competition, provided no long-term certainty for businesses.

Originally one of the fleet was to go to Canada for an extensive upgrade to extend its life and the other four were to have been upgraded in Blenheim, once the first aircraft came back.

The ministry sent the second aircraft to the US to be upgraded, in the hope that it would reduce further delays in the upgrade.

Ministry of Defence deputy secretary for acquisitions Des Ashton said the delays would not add to the original budget for the five aircraft, but it may be another three or four months before the software bugs were ironed out and the two upgraded aircraft were fully operational.

The upgrade involved the replacement of mechanical, avionic, and structural components, and the design and installation of modern communications and navigations system to meet air traffic management regulations around the world.

The software problems did not cause problems with the performance of the aircraft.

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