Air New Zealand’s half year earnings up more than 300 perce

28 February 2013

Air New Zealand’s half year earnings up more than 300 percent

Air New Zealand has lifted its normalised earnings[i] before taxation for the first half of the 2013 financial year by more than 300 percent. Normalised earnings before taxation were $139 million, up from $33 million in the previous corresponding period. Statutory net profit after taxation increased $62 million to $100 million.

Chairman John Palmer described the interim profit result as excellent progress when put against the backdrop of a sluggish economic recovery and ongoing challenges facing the airline industry.

The Board has declared a fully imputed interim dividend of 3.0 cents per share, an increase of 50 percent on the previous corresponding period combined with the benefit of full imputation.

“This is the best interim profit result for five years. The substantial change programme the airline has been implementing has positioned the business for consistent growth and sustainable profitability over the coming years,” Mr Palmer says.

Backing up the airline’s confidence in its future, the company will lease two additional Boeing 777-300ER aircraft to join the fleet in 2014.

Chief Executive Officer Christopher Luxon says Air New Zealand is one of the strongest airlines financially and has a world class management team that is resolutely focused on optimising and growing existing markets, combined with developing new markets.

“We have a new leadership team with deep industry experience fused with fresh perspectives from world class leaders who have joined us from other sectors. The focus and energy within Air New Zealand is quite remarkable. We are stepping it up in all areas of the business to drive improved operational and financial performance while further enhancing our award-winning customer experience,” Mr Luxon says.

“While aviation will always continue to have its challenges, we have a new level of agility and we’re more focused than ever on managing what is controllable within our business.”

Mr Luxon says Air New Zealand has seen increased demand on its domestic routes, despite a slower than expected economic recovery. “It has been particularly pleasing to see regional New Zealand embrace our commitment to more deals every day.”

“Our customers value our quality product offering, on-time performance and competitive pricing. Watch this space for a range of market leadership initiatives over the coming months,” he says.

The Tasman and Pacific Islands remain a critical part of the airline’s network. Our alliance with Virgin Australia is proving very successful, and our ownership interest of 19.99 percent reinforces this relationship. Our Seats to Suit fare structure continues to be well received by our customers and allows us to cater to a wide range of fares and service levels within each aircraft we operate,” Mr Luxon says.

The airline’s cargo business has performed well also, with a 9 percent boost in revenue to $164 million during the first half of the year. “This is an outstanding performance given the difficulties many of our cargo competitors have experienced globally,” Mr Luxon says.

For the first time since the financial crisis, the international long haul part of the network is profitable. “A key driver in achieving this turnaround has been getting our network right and improving our sales execution,” says Mr Luxon.

Mr Palmer says that, based on the company’s current forecast of market demand and fuel prices at current levels, the expectation is that normalised earnings before taxation for the second half of the 2013 financial year will comfortably exceed the corresponding period last year.

Key points:

· Normalised earnings1 before taxation of $139 million, up more than 300 percent

· Statutory net profit after taxation of $100 million, up $62 million

· Operating revenue of $2.4 billion, up 3.4 percent

· Operating cash flow more than doubles to $343 million

· Gearing improves by 4.3 percentage points to 41.8 percent

· Fully imputed interim dividend of 3.0 cps, a 50 percent increase

Ends

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