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Air NZ bumper profit, staff bonus, set to add capacity

August 27, 2015 Aviation, Headline News No Comments Email Email

egtmedia59Air New Zealand has reported a “a terrific 2015 financial year” and is about to reward staff with a handsome bonus. The bonus will see 8000 staff who are not on other incentive programs receive payments of up to NZD 1400 (AUD 1275) next week.

The airline also pledged to keep adding capacity over the coming year and it told travellers to expect cheaper fares.

Having posted a stunning, record profit yesterday, the airline is now set to add more seats on new long-haul destinations and on domestic routes. It’s after Australian passengers. Chief executive Christopher Luxon says Australian passengers from Melbourne, Brisbane, Adelaide and Perth often find it more convenient to transfer in Auckland than in Sydney .

Air New Zealand will add more than 8% capacity during the 2015-16 year. Luxon says he is confident Air New Zealand will stimulate the market and fill the seats.

The airline will offer more than two million domestic fares for less than NZD 100, he told the New Zealand Herald.

The airline is gearing up for more competition across the Pacific, with American Airlines looking at launching direct Auckland-US flights.http://www.deevanagroup.com/home.html

Luxon accused rival Qantas of acting like “Air Sydney”, because of its relative lack of trans-Pacific flights from other Australian cities, the Sydney Morning Herald reported.

“Much of the focus in Australia tends to be around Sydney,” Luxon said.

Air New Zealand’s 2015 annual result includes normalised earnings before taxation of NZD 496 million for the 2015 financial year, an increase of 49% on the prior year. Statutory earnings before taxation were NZD 474 million, while statutory net profit after taxation was NZD 327 million, an increase of 24%.

Capacity growth supported by strong demand, cost efficiencies and lower fuel prices has driven a year of significant earnings growth. Very strong operating cash flow of NZD 1.1 billion was up 51% on the prior year.

The Air NZ board has declared a fully imputed final ordinary dividend of 9.5 cents per share, an increase of 73% on the prior year, resulting in a 2015 full year ordinary dividend of 16 cents per share, an increase of 60% on the prior year.

Luxon said a continued focus on superior commercial results, enhancing the customer experience and further developing the airline’s people and culture had resulted in “a terrific 2015 financial year” across all three of these commitments.

“We remain focused on the Pacific Rim as our growth strategy and will continue to provide the best connections, product and service at competitive prices, to maintain and grow our market share in these regions.

“Next year will see further capacity growth in international markets as we look forward to new routes starting in December 2015 to Houston and Buenos Aires.  And while we are gearing up to launch these exciting new routes we have a team assessing potential new opportunities in Australia, Asia and the Americas.

“We operate one of the most comprehensive domestic jet and regional turboprop networks in the world renowned for frequency, service and reliability.  Our domestic operation will grow 8% in the year ahead, while at the same time maintaining our price leadership with more than two million domestic fares expected to be offered for sale for less than NZD 100.”

Luxon says Air New Zealand has spent considerable time and effort enhancing the on-the-ground and in-flight experience in 2015 financial year.

“This has resulted in a further lift in customer satisfaction including amongst our most frequent flyers, and has seen the airline receive many awards in the past year.”

Air New Zealand’s loyalty program, Airpoints, continues to grow with about 1.9 million members now, up almost 17% on the previous year.  Australia remained the biggest overseas membership base with growth in that market exceeding 20% during the year.

“This doesn’t surprise us as more Australians than ever are embracing the Air New Zealand product and service offering whether it be on the Tasman, to the Pacific Islands, North America or South America,” Luxon added. 

Result Highlights

  • Normalised earnings before tax of NZD 496 million, up 49%
  • Statutory net profit before tax of NZD 474 million, up 32%
  • Statutory net profit after tax of NZD 327 million, up 24%
  • Result includes equity accounted losses of NZD 29 million from Virgin Australia
  • Operating revenue of NZD 4.9 billion, up 5.9% (6.3% excluding foreign exchange)
  • Passenger revenue of NZD 4.1 billion, up 6.8% (7.5% excluding foreign exchange)
  • Operating cash flow of NZD 1.1 billion, up 51%
  • Strong cash position of NZD 1.32 billion, up 7.1%
  • Gearing at 52.4%
  • Fully imputed final ordinary dividend of 9.5 cents per share, an increase of 73%, bringing 2015 full year fully imputed ordinary dividend of 16.0 cents per share, an increase of 60%
  • Expected aircraft capital expenditure of NZD 2.6 billion over the next 4 years
  • Upgraded credit rating – Moody’s Baa2 investment grade, outlook stable

Written by Peter Needham

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