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Booming Air NZ prepares to take on Jetstar in backyard

October 12, 2015 Aviation, Headline News 1 Comment Email Email

egtmedia59Air New Zealand is doing well and expects to do even better. The New Zealand flag carrier is raking in money and is fully prepared to do battle with Jetstar in its home market.

The NZ airline has forecast an 85% leap in first-half earnings before tax to NZD 400 million (AUD 365 million), spurred by increased passenger demand.

The forecast profit is well up from the NZD 216 million (AUD 197 million) notched up in the first half of last year. It excludes any equity-accounted contribution from its stake in Virgin Australia.

In late August, Air New Zealand reported a “a terrific 2015 financial year” and rewarded staff with a handsome bonus of up to NZD 1400 (AUD 1275) each.

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

Now, chairman Tony Carter has told shareholders at the airline’s annual meeting in Auckland that healthy tourist flows to New Zealand in the first quarter of this financial year had spurred significant earnings growth. Reduced fuel costs and savings from fleet efficiencies had helped too.

Chief executive Christopher Luxon said the “little company from New Zealand” [the airline] was well-placed to capitalise on increased international demand, having invested in new fleet. The company is spending AUD 2.6 billion on new planes and has ordered another seven B787 Dreamliners for delivery over the next four years.

Luxon said fleet-wide load factor averaged 85%. The airline’s strategy was to build demand before ordering new aircraft.

Luxon said Air New Zealand was ready and able to take on competition from Jetstar on New Zealand regional routes. Passengers should expect more competitive fares across the board. The airline had placed 1.8 million fares under NZD 100 in the market last year and was targeting more than 2 million under NZD 100 this financial year, Luxon said.

Luxon said the airline had reviewed its processes for handling disruptions following recent delays, one of which forced chairman Carter to sleep in the terminal at Hong Kong International Airport, along with a lot of fellow passengers. See: Air NZ delays made airline’s chairman sleep in terminal

Luxon said delays were “a fact of life” for any airline given weather problems and safety concerns.

When delivering the annual result in August, Luxon commented that Australian passengers from Melbourne, Brisbane, Adelaide and Perth often found it more convenient to transfer in Auckland than in Sydney.

Air New Zealand’s 2015 annual result saw normalised earnings before taxation climb to NZD 496 million for the 2015 financial year, an increase of 49% over 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%.

Written by Peter Needham

Currently there is "1 comment" on this Article:

  1. AgentGerko says:

    It’s the huge profits that smaller carriers like Air NZ and Fiji Airways are making that puts into perspective the ‘Qantas turnaround’. These airlines did not have huge losses to start with and, per capita, make a lot more profit than QF.

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