Air NZ caught out on jet fuel

By GEOFF SENESCALL

Qantas highlighted yesterday that Air New Zealand had indeed been caught napping with its jet fuel hedging policy.

In releasing its half-year result to December, Qantas reported a 4 per cent saving on costs from the same period a year earlier because of its hedging. This compares with a 33 per cent rise in Air New Zealand fuel costs.

Qantas saw a 24 per cent lift in net earnings, while Air New Zealand showed a rise of just 0.7 per cent.

The New Zealand flag carrier vigorously defended its hedging policy when it released its interim accounts on Wednesday, saying the airline industry had been caught by surprise by the rapid oil price rises.

To counter this, it had recently moved to fully hedge fuel costs. It noted that its management of cost had been "excellent" by industry standards.

A Sydney analyst for Salomon Smith Barney, Jason Smith, said Air New Zealand had been slow in reacting to the rise in oil price. "Qantas started fully hedging its fuel book around 12 months before Air New Zealand."

He said that fuel accounted for 13 per cent of Air New Zealand costs and it was important for it to actively manage this.

Meanwhile, Air New Zealand and News Corp remain locked in talks over Ansett Australia as they work out the fine detail.

While price has been decided, speculation is that the talks centre on senior Ansett management. Of great interest is the future of chief executive Rod Eddington, who has also run Cathay Pacific.

Mr Eddington is believed to have preferred Singapore Airlines bought the News stake. But Air New Zealand was unwilling to waive its pre-emptive rights over it.