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Air New Zealand posts 58 percent higher first-half net profit

Air New Zealand posts 58 percent higher first-half net profit

Air New Zealand Ltd. posted higher first-half net profit Friday despite high fuel costs and increased competition, but said oil price volatility made its forecast for a better full-year result less certain.
The airline, which is around 76 percent-owned by the government, said its net profit for the six months to Dec. 31 was NZ$115 million (US$94 million; euro62 million), up 58 percent from the same period a year earlier.
Profit before unusual items and tax, a measure closely watched by analysts, was up 62 percent to NZ$159 million (US$130 million; euro85 million).
The company still expects to better its 2007 result before unusuals and tax for the full fiscal year, but said oil price volatility has reduced the certainty of that forecast.
"Fuel is our largest operational expense and although we have a hedging program in place designed to protect the business from short-term volatility in the market, continued high fuel costs remain a concern," Deputy Chairman Roger France said.
With no easing of oil prices predicted in the near term, the airline's investment in more fuel-efficient aircraft and decisions on destinations they fly to will be increasingly important, France said in a statement.
Chief Executive Rob Fyfe noted that at current prices, fuel costs in the second half of the company's financial year will be "substantially higher." The company was 80 percent hedged for fuel costs for the second half.
While the six-month result was pleasing, Fyfe said the combination of external factors including fuel costs, increased domestic competition, tight labor markets, high airport charges and the impact of the global credit crunch will test the business's ability to adapt in the second half.
For the six-month period Air New Zealand's operating revenue was up 9.6 percent at NZ$2.3 billion (US$1.9 billion; euro1.2 billion), boosted by additional capacity on both domestic and long-haul services and higher passenger numbers per flight.
The airline increased long-haul capacity by 9.1 percent and passenger loads by 5.7 percent, but said this was partly offset by the strength of the New Zealand dollar.
"Both existing domestic competitors have indicated they intend to bring additional capacity into the marketplace, so we're expecting competition to intensify domestically," Fyfe told a media briefing. "That's clearly good for consumers and we're certainly up for the challenge."
Shares in Air New Zealand were down 5.1 percent at NZ$1.67 at 0006 GMT following the result, which brokers said likely was due to the company's outlook.


Updated : 2021-05-16 11:48 GMT+08:00