Strong dollar aids Air NZ

Air New Zealand yesterday confirmed that it expected a $220 million year core net profit.

It was responding to media speculation it could reap up to $75 million in windfall profits as a result of the appreciation of the NZ dollar.

It gave a breakdown of the currencies making up revenue and cost including depreciation, operating leases and interest, as follows: NZ dollar (revenue 52 per cent/cost 51 per cent); Australian dollar (10/4); US dollar (15/40); Great Britain pound (6/1); euro (revenue 2 per cent); yen (8/2); other (7/2).

It said the strengthening of the NZ dollar against the US dollar had benefited Air NZ as a net buyer of US dollars. This had been offset in part by the strengthening of the NZ dollar against revenue currencies, resulting in lower yields.

For the first quarter of the 2004 financial year, international yield declined 7.6 per cent when compared with the previous financial year.

Further yield declines as a result of the strengthening NZ dollar were expected for the remainder of the financial year, it said.

The forecast net positive impact of foreign exchange changes since June 30 was around $18 million for this financial year.

"Air NZ reconfirms that its expectations for the full year results are of a profit before unusuals and tax in the region of $220 million," the company said. "This forecast is subject to the normal level of uncertainty in any forecasting process."

- NZPA