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Positive Air New Zealand results extremely significant

Positive Air New Zealand results extremely significant says UC marketing expert

August 30, 2013

Air New Zealand’s 156 percent hike in annual net profit to $182 million is extremely significant especially in a difficult global market, a University of Canterbury (UC) marketing expert says.

The airline industry operates in an environment with very thin margins and high operating costs, and Air New Zealand‘s strong result is a positive sign for the economy, Dr Sussie Morrish says.

`` Air New Zealand’s strategic partnerships may have contributed to these good results. Being in the Star Alliance means they have access to strategic partners with a global network reach. Its partnership with Virgin, and new markets such as Hawaii and China, have no doubt also been contributing factors.

Air New Zealand is one of the better performing airlines globally. It has always performed better than most airlines and was quite remarkable in riding out the tough times such as the Gulf War, the SARS virus outbreak and the global financial crisis (GFC).

``However, analysts will recall that their one big mistake, if you can call it that, in the past was the acquisition of Ansett. The losses then were due to them propping up the Australian operations and led to a government bail-out.

``Airlines need to upgrade their fleet regularly and it’s not surprising Air New Zealand says it will spend around $1.8 billion on new planes in the next three years.

``This helps their load capacity and fuel consumption as new aircrafts can be better configured for space, fuel economy and to cater to the different classes of passengers. Besides, one cannot be on top of the industry with an ageing fleet.’’

Dr Morrish cannot see government plans to sell down its stake from around 74 per cent of the airline to 51 per cent affecting Air New Zealand’s profits. Given the airline’s current financial position, it is a very attractive option for investors, she says.

``Traditionally, the Government has always held a majority shareholding in Air New Zealand and therefore still retains significant control. In the past, Singapore Airlines has held significant shareholding but this was hugely diluted by the Ansett problem.

``Air New Zealand has won many awards including the Airline of the Year multiple times and its customer service is one of the best in the world. It is also viewed as an innovative company and was first to introduce the self-check in kiosks and trial alternative bio-aviation fuel.

``Its advertising and promotion are always kept fresh using events or celebrities that are strategically linked to New Zealand, such as Bear Grylls, to demonstrate its safety instructions which often go viral as soon as they are out. The airline somehow manages to capture the New Zealand spirit that resonates worldwide,’’ Dr Morris says.


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