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Air New Zealand reports second highest profit in its history
August 24th 2018
In Auckland, Air NZ chairman, Tony Carter, was in equally good spirits when the flag carrier presented its fiscal year results to June 30 on Thursday. Read More »
The carrier announced earnings before tax for the financial year of NZ$540 million (US$360 million), an increase from the previous year’s result of NZ$527 million and is the second highest profit in the airline’s history. Net profit after taxation grew 2.1%, to NZ$390 million.
Operating revenue for the 12 months improved 7.4%, to NZ$5.5 billion, as passenger and cargo revenues showed strong growth. RASKs, excluding the impact of foreign exchange fluctuations, was up 1.8%, while RPKs increased 5.3% on capacity growth of 5%.
Air NZ shareholders will receive a final dividend of NZ$11 cents a share, taking the total ordinary declared dividend for the year to NZ$ 22 cents a share, up 4.8% year-on-year.
“This is an impressive financial result driven by strong revenue growth across the airline's key markets as well as a continued focus on sustainable cost improvement, despite significantly higher fuel prices. The ability of the airline to achieve its second highest profit in such a challenging environment speaks to the focused strategy and unique competitive advantages that CEO, Christopher Luxon, and his leadership team have spent years building,” said Carter.
The airline’s operations have been severely impacted by the frequent grounding of parts of its Rolls-Royce Trent 1000-powered B787-9 fleet. The airline has had to lease in capacity to make up for the shortfall and this is not about to change in the immediate future.
Presenting the full-year results, Air NZ said it would lease two B777-200s and one B777-300 as it worked through maintenance requirements associated with the Trent 1000 issues.
“The adjustments to our schedule will essentially free up two widebody aircraft enabling us to provide greater schedule certainty for customers. This will include adjusting weekly frequency on our Buenos Aires and Taipei services, as well as seeking to retime our flights to Tokyo's Haneda Airport. We are confident that these proactive steps will result in better reliability for our customers,” said Luxon.
Air NZ will launch direct services to Chicago and Taipei in November, new services to Brisbane from Wellington and Queenstown from December and a third daily Auckland-Singapore schedule in partnership with Singapore Airlines.
In the next 12 months, the airline expected to take delivery of 10 A320neo family aircraft and two additional B787-9s with increased premium cabin count and Rolls-Royce TEN engines. The TEN propulsion units are not affected by the Trent 1000 issues.
Luxon said: “Looking out to the next two years, the airline is expecting to grow by one million customers a year, reaching 19 million customers by the end of 2020.”
Nonetheless, the airline expected a slightly lower performance in the current fiscal year. “Based upon current market conditions and assuming an average jet fuel price of US$85 per barrel, 2019 underlying earnings before taxation is expected to be in the range of NZ$425 million to NZ$525 million. This excludes an estimated NZ$40 million impact from schedule changes prompted by the global Rolls-Royce engine issues,” he said.
