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Australia plays significant role in Air NZ plans

May 9, 2016 Headline News No Comments Email Email

egtmedia59Air New Zealand plans to collaborate strongly with Tourism Australia as it works to leverage Auckland’s geographic advantage to spur North American growth.

According to an investor day presentation by the airline, Air New Zealand expects North American growth to continue to feed trans-Tasman flows. Australian traffic, in turn, will help to feed the New Zealand carrier’s North and South American growth via Auckland.

Outbound flows are driven by increased sales presence in Australia and the ease of international transfers from Australian cities other than Sydney, the presentation said.

Air New Zealand says its 2017 earnings won’t equal the NZD 800 million it has forecast for 2016, the New Zealand Herald reported. It faces increased competition and will receive less benefit from foreign exchange hedging.

An advantage in coming years will be the increasing youth of its fleet. Air New Zealand has committed investment of NZD 2.2 billion in aircraft from 2017 to 2020 and the fleet age will decline with deliveries of B787s, A320s and ATRs. This will produce an average fleet age of 6.7 years in 2018, low compared to the global average of 9.9 years.

The Auckland-based carrier faces some near-term challenges that will buffet the 2017 results, according to the investor day presentation.

The airline’s forecast for pre-tax earnings this year, as presented with the first-half results in February, builds on the NZD 457 million the company earned in the first half. That figure excludes the contribution from Virgin Australia.

Air New Zealand foresees increased capacity in the industry driving “significant growth of seats across the network” which will impact overall yield as the market adjusts to the extra capacity.

Written by Peter Needham

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