FIRST CUT: Air NZ posts 7.4% decline in 1H pretax profit as
fuel prices bite
By Rebecca Howard
Feb. 22 (BusinessDesk) - Air New Zealand posted a 7.4 percent fall in first-half pretax profit as rising fuel prices offset record high passenger revenue.
Pretax earnings fell to $323 million in the six months ended Dec. 31 from $349 million in the same period a year earlier, the Auckland-based company said in a statement. The prior period also included a $22 million gain related to the divestment of Virgin Australia, it said.
Net profit in the first half fell 9.4 percent to $232 million or 20.7 cents per share versus $256 million or 22.8 cents per share in the prior period. Operating revenue was $2.7 billion, up 5.6 percent. The result was driven by operating revenue growth of 5.6 percent, with robust demand across all markets and particularly strong growth in the short-haul network. Passenger revenue reached an all-time record for an interim result, at $2.3 billion, Air New Zealand said.
Chairman Tony Carter said the result demonstrated "the airline’s resilience despite an 18 percent increase in fuel price."
“This high-quality interim performance was driven by robust passenger demand and revenue growth, reflecting the airline’s strong position in New Zealand and throughout our Pacific Rim network," he said.
The board declared a fully imputed interim dividend of 11 cents per share, an increase of 10 percent from the prior period and the highest ordinary interim dividend in the airline’s history. The interim dividend will be paid on March 16 to investors on record as of the close of business on March 9.
The airline also announced the launch of a new direct service to Taipei, beginning in November 2018. Taipei will become the airline’s seventh destination in Asia.
Looking ahead, Carter remained upbeat about the full year result. “Looking to the remainder of the year, we are optimistic about the overall market dynamics. Based upon the current market conditions and despite the increased price of jet fuel, the Company is still expecting 2018 earnings before taxation to exceed the prior year," he said.
The stock last traded at $2.965 and has gained 38 percent over the past year.