Headwinds warning as Air NZ profit drops
Air New Zealand has posted a
$152 million profit for the second half of 2018, an $80m drop on the previous six months.
The after-tax profit for the six months ended on December 31 was down 35 per cent from the
$232m posted for the first six months of 2018.
The airline is warning of more headwinds in the future.
In a statement to the New Zealand stock exchange yesterday, the airline’s chairman, Tony Carter, thanked its 12,000 staff members for their hard work during ‘‘a very challenging operational period for the airline’’.
He said recent route launches to Chicago and Taipei had performed ahead of expectations.
Air New Zealand chief executive Christopher Luxon said growth in the New Zealand market was slowing to be more in-line with other developed markets.
‘‘While we continue to expect solid growth across our key markets including domestic New Zealand, we cannot ignore signals that the rate of growth has slowed somewhat from prior years.’’
Just six months ago Air New Zealand was celebrating its second-highest annual profit ever when it posted a $390m after-tax profit. That result coincided with staff bonuses of up to $1800 for all permanent employees.
Now the airline was looking at ways to reduce costs and stimulate demand.
On Tuesday Air New Zealand released new pricing, with entrylevel fares on 41 domestic routes reducing by 50 per cent.
The move came a month after the airline downgraded its forecast profit before tax to between $340m and $400m for the year to June 30. That outlook remained unchanged, it said yesterday.
The new forecast was down from the previous forecast of
$425m to $525m, which excluded an estimated $30m to $40m impact due to schedule changes stemming from problems with RollsRoyce engines on its Boeing 787 Dreamliners.
Luxon said at the time that lower forward bookings were also to blame.
The airline had also launched a network, fleet and costs review, for which an update was expected by the end of March.
Revenue was up 7 per cent to
$2.9 billion in the six months, and operating cashflow of $475m was down 1 per cent, Carter said.
Revenue was ‘‘more than offset’’ by a 28 per cent increase in fuel prices and increased operational costs, he said.
The Government owns 52 per cent of the company. The remaining shares are listed on the NZX, and shareholders will receive an interim dividend of 11c a share.
House of Travel commercial director Brent Thomas said the market was incredibly competitive, with Air New Zealand up against more than 30 airlines.
He said outbound tourism was still strong, with the 8 per cent growth seen in 2018 showing no signs of letting up.