KEY POINTS:
Air New Zealand today announced its June year net profit lifted 123 per cent to $214 million.
The airline, 80 per cent controlled by the Government, declared a final dividend of 5 cents per share which is on top of the interim dividend of 3cps and the previously announced special dividend of 10cps.
The Government will receive $152m of the total payout of $190m.
The company said its profit before unusuals and tax rose 79 per cent to $268m.
"This is the strongest result in the past decade and comes off the back of significant growth in passenger revenue, and a continued reduction in unit operating costs," chairman John Palmer said.
Mr Palmer said the company was pleased with the level of profitability, "particularly in light of the ongoing pressures we face from competitors, and the challenge of accommodating increased fuel costs and excess charges at some New Zealand airports".
Operating revenue for the year rose over 13 per cent to $4.3 billion.
The company cut the price of domestic flights by up to 26 per cent in February.
Chief executive Rob Fyfe said the past year would go down as one of the most pivotal in the company's history. The restructuring that has gone on since the Government had to bail the company out after its collapse in September 2001 had started to pay off.
"We firmly expect that the success we have achieved at home and in existing and new international destinations will continue over the next year as we further seek to expand our business."
Mr Fyfe said the airline had returned its trans Tasman operation to profitability. That sector is the subject of strong competition and one of the reasons for the airline's aborted plans to ally and code share with rival Qantas.
"Rather than 'take a breather' we intend to continue to adapt our Tasman operation and significantly enhance our product and service proposition to cushion us from the next capacity wave that we expect to hit the market," Mr Fyfe said.
Mr Fyfe said the company had built up strong earnings momentum, particularly in the second half of 2007 and this had carried through into early 2008 with strong forward bookings.
In the longer term, plans to introduce Boeing 787-9 and 777-300ER aircraft would aid growth into the next decade, offer greater flexibility and allow new routes to be opened, he said.
Air NZ shares were up 2 cents to $2.12 shortly after the announcement. They have risen from $1.10 a year ago.
Load factors on Tasman and Pacific Island routes from 70.9 per cent in 2006 to 75.3 per cent in 2007. That had significantly assisted profitability across the Tasman.
Passengers carried increased by 4.9 per cent to 12.5 million and this combined with improved yields were the key drivers of the improved revenue performance.
Mr Fyfe said the company's business transformation programme had delivered a further $128m of revenue, productivity and cost benefits during the year.
Operating spending (excluding the impact of foreign exchange and fuel price rises) had increased by 2 per cent against a rise in capacity of 3.1 per cent.
Labour costs as a percentage of revenue fell from 22.7 per cent last year to 20.6 per cent.
Cash generated from operating activities was $584 million, $242 million more than in 2006.
The company was sitting on a cash pile of over $1 billion at June 30.
The company's net gearing (including net capitalised aircraft operating leases) improved to 47.3 per cent.
The company has hedged 90 per cent of net US dollar operating cash flow at US67.1c. It has also hedged 62 per cent of 2008 fuel requirements at US$70.50 ($99.40) per barrel.
Its fuel requirements are falling due to using more modern aircraft.
- NZPA
