29 Aug 2013

Air NZ profit doubled

4:22 pm on 29 August 2013

In its best result in five years, Air New Zealand has more than doubled its annual net profit.

Net profit for the 12 months ended June rose to $182 million compared with $71 million the previous year.

AAP reports operating cash flow was at a record $750 million and it has cash holdings of $1.15 billion.

Chairman John Palmer says the result places Air New Zealand amongst the best-performing airlines in the world.

He says the airline is focused on improving on this result in the current year and early results and forward bookings are encouraging.

The Government will get a final dividend of almost $41 million from Air New Zealand, taking its payment for the year to June to $65.4 million.

That's up from $50 million the previous year. The result was also its third best ever.

Mr Palmer, who will step down as chairman in September, says the airline is spending $1.8 billion on 21 new aircraft over the next three years.

"There can be no greater vote of confidence in the growth potential of the airline, and of the attractiveness of New Zealand as an international destination, than expanding and upgrading our fleet," he says.

Chief executive Christopher Luxon says his company has a relentless focus on growing Air New Zealand.

"We've really committed to putting growth at the heart of this company and to see our sales and our revenues up 3%," he says. "At the same time to see very good cost control and our unit costs ... down 3% and that's in an environment with very elevated fuel prices and also increasing airport prices as well."

The airline flew 2.2% more passengers in the 12 months and its revenue per passenger kilometres rose 2.7%.

Shares rose as much as 7 cents to $1.44 in morning trading.

Govt in stronger position

The Government says Air New Zealand's improved financial performance puts it in a stronger position to sell further shares in the company.

Last week, the airline said it planned to axe 180 engineers jobs by the middle of next year due to the introduction of new aircraft that won't need as much maintenance.

The airline is presently 79% owned by the Government.

Prime Minister John Key described the result as "good news" for Air New Zealand in an industry that is very difficult to make money in. "It shows the company is performing well; they've had very good leadership in the past under Rob Fyfe and continued under Christopher Luxon."

He says it is very difficult to make money in the airline industry and it arguably puts the Government in a slightly stronger position when it wants to continue its sell down to 51%.

But Mr Key says the improved performance is unlikely to influence when that sell down will occur.