Gullivers says changes to commission will not affect profits

Listed company Gullivers Travel says it doesn't expect recent changes to airlines' commission structures to have any effect on earnings forecasts.

On Monday, Qantas said it would reduce travel agent base commissions for tickets sold in Australia and New Zealand from April next year.

Under the new base commission structure, Australian domestic, trans-Tasman and New Zealand domestic base commissions of 1 per cent are to be discontinued.

International base commissions will also be reduced from 7 per cent to 5 per cent.

Air New Zealand and Singapore Airlines are also understood to have announced changes to their commission structure.

Gullivers managing director Andrew Bagnall said the changes were largely in line with expectations from previous airline discussions.

"(Besides), ticket commissions are just one element of the income earned by selling air tickets."

Gullivers has forecast earnings per share of 13.8c for 2005, and 14.4c for 2006.

Earnings before interest, tax, depreciation and amortisation (Ebitda) were forecast at $22.75 million for 2005 and $24.23m in 2006, up from $18.48 million in 2004.

Mr Bagnall said in November -- while revealing a $5.67m September half-year net profit -- that the strong financial performance was expected to continue in the 2006 financial year "provided current operating conditions remained".

Today he said directors remained confident of meeting the financial forecasts.

Gullivers has operated in a zero commission environment for Air New Zealand domestic, trans-Tasman and Pacific Islands flights for over two years.

"The other income elements include improved volume rebate and incentive payments and marketing support."

The new base commission structure will begin on April 1.

Shares in Gullivers were up 3c at 130c at midday, after trading between 165c and 125c this year.

- NZPA