Air NZ FY profit more than doubles, beating estimates
By Jonathan Underhill
Aug. 29 (BusinessDesk) – Air New Zealand, which is preparing to spend $1.8 billion on aircraft in the next three years, more than doubled annual profit, beating estimates, as it squeezed more revenue from a rising volume of passengers and benefited from favourable foreign exchange movements.
Net profit rose to $182 million in the 12 months ended June 30, from $71 million a year earlier, the Auckland-based company said in a statement. Sales rose 3 percent to $4.6 billion. First NZ Capital had forecast profit of $168.3 million
Shares of the airline, which is 74 percent owned by the government and slated for a partial selldown, jumped 3.7 percent to $1.42, posted its best results in five years. It has gained about 60 percent in the past year, more than double the increase in the NZX 50 Index, and is rated a ‘buy’ by all six analysts polled by Reuters, with a median price target of $1.80.
The company gave no specific guidance for the year ahead. Chief executive Christopher Luxon Air New Zealand is “focused on further improving this result in the 2014 financial year.”
“Based on our forecast of market demand and fuel prices at current levels, early results and forward bookings are encouraging,” he said.
Foreign exchange gains added $57 million to earnings.
To cater for growing demand and update its fleet to the latest fuel-efficient models, Air New Zealand will add four Airbus A320's, one ATR72-600 and one Boeing 777-300ER aircraft to its fleet in 2014.It plans to add nine aircraft in 2015, six in 2016 and a further two in 2017.
The company is well placed to fund its expansion, with net cash on hand rising 12 percent to $1.15 billion at the end of the latest financial year, while gearing fell 7 percentage points to 39.1 percent.
The airline’s international services reported the strongest improvement in yield in 2013, rising 4.3 percent to 10.6 cents per revenue passenger kilometre (RPK) after rationalising its network, including suspending the Hong Kong to London route.
On the Tasman and Pacific Island routes, yield rose 1.9 percent as the company added capacity.
Total passenger numbers rose 2.2 percent to 13.4 million, outpacing a 1.7 percent increase in available seat kilometres. The load factor rose 0.8 points to 83.6 percent and yield improved 0.9 percent to 13.6 cents per RPK.
Yield on its largest domestic service fell 5.3 percent to 27.2 cents per RPK even as passenger numbers grew 2.3 percent to 8.69 million and the airline was forced to offer cheaper fares to stimulate demand.
The company will pay a final dividend of 5 cents a share, making 8 cents for the year, up 45 percent from a year earlier.