Air NZ forecasts profit climb as jobs go

JOSH MARTIN
Last updated 05:00 11/12/2013

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Air New Zealand's financial fortunes continue to soar, with the airline forecasting its profit for the half year to December 31 will be 20 per cent higher than a year earlier.

Based on last year's first half profit before tax of $141 million the carrier should report a $169m profit before tax for the current period.

Air New Zealand attributed the stronger performance to resolving labour contract disputes, which cost the airline $10m in voluntary redundancies and were included in the forecast.

The airline and its subsidiaries have projected more than 200 redundancies this year, including 69 engineers and other staff at Blenheim's Safe Air, although some of those positions were still being negotiated with unions.

Air New Zealand said it had "made good progress [in the] year to date and remains on target to exceed last year's earnings for the full year".

The airline recorded a $182m profit after tax for the year to June 30, its best in five years.

The Government recently sold down its stake in the flag carrier to 53 per cent.

An Air New Zealand spokesperson said the airline did not disclose the improved outlook before the selldown because the December figures were not finalised.

Craigs Investment Partner analyst Chris Byrne said, given the volatility of airline stocks worldwide, it was encouraging to see Air New Zealand continue to deliver results. "The shifting of capacity from Asia to North America and fleet upgrades would be the key drivers behind this, even though this forecast was in line with our expectations.

The carrier continues to outshine other airlines including rival Qantas and alliance partner Virgin Australia which were embroiled in intense domestic competition which has impacted on profits.

Air New Zealand's outlook is in stark contrast to Qantas which last week warned of an underlying loss before tax of between A$250m and A$300m for the half year period.

Meanwhile, Air New Zealand carried just over 1 million passengers during November, up 1.1 per cent more than the same month last year, despite a capacity decrease of 2.5 per cent.

Air New Zealand's share price closed at $1.62 down 1c.

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