Fuel costs and rivals will hit Air NZ results

Cut-throat competition from rival airlines and mounting jet fuel costs will continue to plague Air New Zealand in the coming year.

Airline industry watchers expect the national carrier's past year results, which will be released today, to reflect the same problems. The company is also set to name a new chief executive.

Goldman Sachs JBWere aviation analyst Peter Sigley had one word to describe the 2005-2006 year: "Difficult".

"Fuel prices are extremely high. It's a competitive market in the transtasman. High currency has been impacting the engineering business too," said Sigley.

"So it's hard work for the company at the moment."

He forecasts pretax profit for the past year to be in the $220 million to $225 million range - in line with company guidance of $220 million, which was decreased in June after soaring jet fuel prices continued to take a bite out of profits.

The company set previous forecasts at $240 million.

Today's results should also include a 2.5c a share dividend, in addition to the 2.5c a share dividend paid in February.

Ralph Norris, managing director and chief executive of the national carrier, leaves this week and late next month will take over the top job at the Commonwealth Bank of Australia.

All bets are on internal man Rob Fyfe to take Norris' post.

Fyfe has been Air New Zealand's group general manager, airlines or second in command, for almost two years, where part of his job was to trim costs.

Fyfe's past roles were executive positions at National Australia Bank and Telecom.

Other candidates may be Craig Sinclair, the airline's group general manager, ventures and Norm Thompson, head of Air New Zealand's sales and marketing department.

External contenders are said to be Ray Webster, chief executive of the British budget airline easyJet, or Gary Chapman, the president of Dnata, Dubai airline Emirates' ground-handling and travel agent business.

Air New Zealand should benefit from a landmark aviation agreement which allows New Zealand airlines to fly limitless flights to and from Britain.

Progress on securing those new landing slots at Heathrow Airport could also be announced today.

Air New Zealand's shares have been severely depressed, touching a near record low of $1.20c a share last week when the airline said rising international oil costs forced a lofty increase in fuel surcharges.

Domestic airfares will go up 4.5 per cent this week, an average increase of $6 a fare.

International airfares could see up to a $20 a ticket rise.

Competing airline Qantas sets its fifth fuel surcharge increase soon after.

The airline said the surcharge increase would not be enough to fully recover the bulging cost of jet fuel.

In June, projections pegged fuel costs at 20 per cent of annual expenses or $623 million.

Now fuel costs could rise above 30 per cent of annual costs.

Analysts predict labour woes, which plagued the airline this summer and cost it millions, may be less of an issue this year.

Also on the agenda for this week is Pyne Gould Corporation's annual results tomorrow.

The Christchurch-based parent company of the rural and financial services firm forecasts a rise in overall net surplus for the full-year ended June 30 and another increase in the final dividend.

Last year, Pyne Gould reported $25.96 million in annual net profit. The parent company owns a 55 per cent holding in Pyne Gould Guinness, the rural services firm that is set to merge with rival firm Wrightson.

The new company is expected to yield revenue of more than $1 billion.

Pacific Retail Group's annual meeting will be held in Auckland tomorrow. Chairman Maurice Kidd and director Richard Reilly will step down at the meeting.