French officials say there is no hope of finding survivors in the wreckage of an Air New Zealand plane which crashed into the Mediterranean sea during a test flight.

The Airbus A320 crashed off the south-east coast of France near Perpignan

The plane had been leased by German charter airline, XL Airways for two years and was in the process of being handed back to Air New Zealand.

It is feared two German pilots, four Air New Zealand employees and a Wellington based Civil Aviation Authority representative have been killed.

Air New Zealand chief executive Rob Fyfe says it is a sad day.

"Air New Zealand staff on board the aircraft are based in New Zealand, and then were up in Perpignan to go through an acceptance process, effectively ensuring the aircraft was up to Air New Zealand's standards," he said.

New Zealand Prime Minister John Key has described the crash as a tragic loss.