Air NZ’s FY19 profit drop

AIR New Zealand has revealed a 31% drop in net profit before tax for FY2019 in its annual results, down to NZ$374 million from NZ$540 million.

Net profit after tax dived 20.5% from NZ$390m to NZ$270 million, with an operating revenue growth of 5.3% offset by a NZ$191 million hike in fuel prices as well as operating costs due to global Rolls-Royce engine issues.

Chairman Tony Carter admitted the result was a “disappointment”, saying “when we first saw signs that demand was slowing, we took immediate steps to review our network, fleet and cost base, to position our airline for success in a lower growth environment.

“To have achieved a solid result despite these headwinds speaks volumes about the extraordinary dedication and commitment of our people.”

Outgoing Chief Executive Officer Christopher Luxon echoed Carter’s sentiments of more challenging trading conditions.

“While the New Zealand market has seen foreign competitors reduce capacity or withdraw completely this year, we have continued to grow both domestically and internationally and to adjust our domestic fare structure to keep New Zealanders connected to each other and the world,” he said.

Air NZ is targeting profit before tax between NZ$350 million and NZ$450 million for 2020.

MEANWHILE, Air NZ has revealed CFO Jeff McDowall will become acting CEO from 26 Sep until a replacement for Christopher Luxon commences, which may not be until Q1 2020.

Carter will also retire on 25 Sep and be replaced by current Director Dame Therese Walsh.