FIRST CUT: Air New Zealand lifts annual earnings 2.5% despite rising fuel prices
By Rebecca Howard
Aug. 23 (BusinessDesk) - Air New Zealand lifted full-year earnings 2.5 percent despite significantly higher fuel prices, but the airline is slightly more downbeat about the current financial year as those costs continue to push higher.
The Auckland-based national carrier said pre-tax earnings were $540 million in the year to June 30 versus $527 million in the prior year. The company had expected to improve on 2017 earnings based on an average jet fuel price of US$60 per barrel. The price, however, increased 25 percent to US$75 per barrel.
"This is an impressive financial result, driven by strong revenue growth across the airline’s key markets, as well as continued focus on sustainable cost improvement, despite significantly higher fuel prices," said chair Tony Carter in a statement.
Net profit rose 2.1 percent to $390 million. The pre-tax earnings were the second highest the airline has reported, it said. Operating revenue rose 7.4 percent to $5.5 billion.
The company will pay a final dividend of 11 cents per share, taking the total dividend for the year to 22 cents, up 4.8 percent on the year. The dividend will be paid Sept. 19 to shareholders on record as at Sept. 7.
Looking ahead, Air New Zealand said 2019 underlying earnings before tax is expected to be in the range of $425 million to $525 million, based on current market conditions and assuming an average jet fuel price of US$85 per barrel.
This excludes an estimated $30 million to $40 million impact from schedule changes prompted by the global Rolls-Royce engine issues, it said.
The stock last traded at $3.41 and is up 6.9 percent so far this year.