Air New Zealand profit soars
Air New Zealand has reported a big lift in profit and will reward investors with a 10 cent special dividend.
The majority state-owned carrier's $262 million profit after tax for the year to June 30 was up 45 per cent on last year and was achieved on the back of increased passenger volumes and reduced fuel costs.
Normalised profits before tax were up 30 per cent to $332m, while revenue was up 1 per cent to $4.66 billion. A normalised profit strips out hedging effects, which are contracts to protect the airline from changing fuel and foreign exchange rates.
Investors will be paid a final dividend of 5.5 cents a share, bringing the total ordinary dividend for the year to 10c a share, an increase of 25 per cent from 8c last year.
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After a review of the company's capital structure, a fully imputed special dividend of 10c a share has been declared.
Chairman Tony Carter said the result represented the third consecutive year of strong earnings growth.
"We have made significant progress on our key strategic initiatives," he said.
"With new aircraft offering better operating economics, an optimised network with the right alliance partners, disciplined cost management and a daily focus on improving the customer experience, we are very well positioned to continue growing."
Air New Zealand carried 13.7 million passengers during the year, up 2.5 per cent, while its aircraft were on average flying 84.1 per cent full, up 0.5 points.
Cargo yields were down 5.3 per cent in a flat global market, offset by volume growth of 2.3 per cent.
Labour costs rose $45m, including restructuring and fleet transition costs, but fuel costs were down because of more favourable hedging results and the introduction of more fuel-efficient aircraft.
Chief executive Christopher Luxon said the airline was working on several initiatives to improve passenger services.
They included induction of the Boeing 787-9 long-range jet to the fleet, refurbishment of its Boeing 777-200ER fleet with new seats, moving to new terminals and lounges in Los Angeles and London and multiple lounge upgrades across the network.
An alliance with Singapore Airlines had recently received regulatory approval.
"This alliance is the third strategic revenue-sharing alliance we have formed in recent years, following agreements with Virgin Australia [re-authorised in 2013] and Cathay Pacific in 2012," Luxon said.
"Forming alliances with the right partners in the right markets is a key pillar of our Go Beyond strategy.
"Strong alliances such as this provide us with a platform for sustainable growth, allowing us to open up new routes and markets across the Pacific Rim."