Visitor numbers underpin strong results

By ELLEN READ

Air New Zealand and Auckland International Airport open their books this week, with strong results but differing outlooks expected.

While the airport is expected to predict strong growth in the year ahead, Air New Zealand is likely to be more circumspect.

"I think Auckland International could deliver a positive surprise," Forsyth Barr head of research Rob Mercer said.

Strong passenger numbers and growth in landing charges underpin his $93.6 million bottom line forecast.

Investors are certainly anticipating good news, with the stock near highs of $7.30 last week.

"The outlook is solid too. I think we're going to see a period of really strong tourism growth over the next couple of years," Mercer said.

Airlines putting on new aircraft and routes mean the airport should capitalise on increased passenger numbers and landing charges.

Non-regulated areas of the business - such as car parks and retail outlets - are also tipped to drive earnings growth in coming years.

Growth in routes and passenger numbers also underline Mercer's forecast for Air New Zealand.

A move by the airline towards lower fares and higher passenger numbers, lack of domestic competition and a strong local economy, lift his prediction to a $240 million pre-tax profit - ahead of the $220 million pre-tax the company itself predicts.

Any variation of plus or minus about 10 per cent and the stock exchange should have been advised.

"Really it should be higher than [$240 million]. The Qantas result was strong and that's giving them a second-half performance in line with last year," Mercer said. The outlook is likely to be flat for the year ahead, with growth kicking in after that when the company's new fleet arrives and starts service.

That said, airlines are hard to forecast as factors such as fuel costs, market price moves and US dollar exposure are just some of the variables outside the company's control.

Once the passengers have cleared the airport, they can visit Sky City Entertainment, which also announces its annual result this week. A post-tax profit of about $113 million is expected - which would be 10 per cent growth on last year.

While analysts maintain that the Auckland operations underpin company growth, they will be looking for signs of health in Sky City's Australian ventures.

Sky City has been criticised for expanding across the Tasman as the Darwin and Adelaide facilities have yet to prove their worth. The company maintains the criticism is short-sighted as it could take a few years for them to become profitable.

"They make most of their money in Auckland, they always have, so we'll be looking to see confirmation of continued solid performance by the Auckland gaming business," Forsyth Barr senior analyst Jeremy Miller said.