Air New Zealand is thrilled with the performance of the new routes it launched to Houston and Buenos Aires in December.
“We are thrilled with the demand and performance of these routes” and the same was true of the services to Beijing launched by the airline’s partner Air China at the same time, chief executive Christopher Luxon said.
Air New Zealand has announced earnings before taxation of NZD 457 million for the first six months of the 2016 financial year, an increase of 132% on the prior period. Net profit after taxation was NZD 338 million, an increase of 154%.
The interim result was driven by exceptionally strong passenger revenue growth, underpinned by over 16% capacity growth across the network.
Air New Zealand’s 25.9% investment in Virgin Australia, together with its share of Christchurch Engine Centre’s earnings, contributed NZD 15 million and NZD 10 million respectively, for the first half of the 2016 financial year.
On the cost side, Air New Zealand continued to benefit from substantially lower jet fuel prices, as well as leveraging strong economies of scale and efficiencies from its fleet simplification program, the carrier said in a statement.
Operating cash flow of NZD 541 million was up 43% on the prior period.
“Air New Zealand’s growth strategy will continue to benefit customers, employees and shareholders,” Luxon said.
“Our network will provide more frequency, more routes and competitive prices throughout New Zealand and the Pacific Rim, combined with modern aircraft offering better operating economics.
“We have received tremendous response to our expansion in the domestic market with passenger demand up 10% in the period and more importantly, great feedback on our larger ATR turboprop aircraft in the regional markets. We continue to look for ways to improve the experience of our customers, and I am very excited about the new scheduling changes that will take effect in the coming months. These will reduce complexity and create greater customer choice by improving connectivity, consistency and frequency across the domestic and regional network.”
Luxon said the Tasman and Pacific Island markets continue to perform strongly for the airline.
“New Zealand continues to be not only a destination that is in big demand for Australians but it is also a gateway to North America, South America and the Pacific Islands for travellers from Australia. This traffic is adding to the strength of Air New Zealand’s services to these markets. In recognition of the opportunity, we will continue to build our presence in Australia.”
The airline’s strategic focus for the second half of the financial year continues to be profitable growth of the network, with total capacity expected to increase approximately 7% for the second half of the financial year, driven by growth in the Domestic, American and Asian markets, the airline said.
Chairman Tony Carter concluded that based upon current market conditions and assuming current fuel prices and foreign exchange rates, the airline is targeting earnings before taxation for the full year 2016 to exceed NZD 800 million. This outlook excludes equity earnings from the Virgin Australia shareholding.
- Earnings before taxation of NZD 457 million, up 132%
- Net profit after taxation of NZD 338 million, up 154%
- Passenger revenue of NZD 2.3 billion, up 16%
- Group capacity up 16%, with 84.4% load factor
- Operating cash flow of NZD 541 million, up 43%
- Gearing at 53.8%
- Board approves fully imputed interim dividend of 10.0 cents per share, an increase of 54%.
Edited by Peter Needham