Air NZ profits double on lower fuel costs

Photo / Paul Estcourt.

Air New Zealand, the state-controlled national carrier, reported first-half profit almost doubled as fuel costs tumbled and the airline reined in labour costs.

Net income rose to $56 million, or 6 cents a share, in the six months ended Dec. 31, from$24 million, or 2.3 cents a year earlier, the Auckland-based company said in a statement today. Revenue declined 15 per cent, reflecting lower yields, passenger numbers and cargo volumes.

"The fallout from the global financial crisis continued to make operating conditions difficult" in the first half, chief executive Rob Fyfe said. "Passenger demand does seem to have bottomed out in the first half of the 2010 financial year and volumes have shown good signs of recovery since, although at significantly lower yields."

The airline will pay a first-half dividend of 3 cents a share.

The shares traded yesterday at $1.31 and have surged 60 per cent in the past 12 months.

Fuel costs fell to $458 million from $948 million a year earlier, while labour costs declined to $492 million, from $508 million.

Operating revenue fell 15 per cent to $2.1 billion as passenger demand slipped 4.6 per cent.

The passenger load factor climbed 3 percentage points to 81.6 per cent.

The airline said it is in a relatively strong financial position, with some $1.1 billion of cash.

Revenue from passengers slipped to $1.7 billion from $1.9 billion, while cargo almost halved to $127 million from $232 million.

Chairman John Palmer said that based on current exchange rates, the airline faces a $20 million foreign exchange loss in the second half, compared to a $24 million gain in the first six on the of the year.

"We expect the business to remain profitable in the second half," Palmer said.