Air NZ loss doubles on fuel, labour costs
AUCKLAND: Higher fuel and labour costs have led to Air New Zealand more than doubling its loss in its latest financial year.
The airline made a net loss of $591 million in the year to June 30, up from $292 million in the prior financial year.
Its loss before tax was $810 million, up from $415 million, and the airline’s loss before other significant items and tax was $725 million, up from $444 million.
Air New Zealand’s revenue rose from $2.517 billion to $2.734 billion.
But its expenses blew out from $2.18 billion to $2.738 billion.
That was driven by fuel costs rising from $311 million to $560 million and labour costs up from $830 million to $976 million.
Air New Zealand said although the financial year ended strongly following the reopening of borders in March, pandemicrelated travel restrictions greatly affected its operating revenue.
Cargo and domestic revenues helped lift overall revenue by 9% but high fuel prices and reduced flying over much of the year resulted in a loss for the period.
Chief executive Greg Foran said the airline would move deftly to address change.
‘‘For customers, we’ve been focused on restoring services, maintaining a choice of fares and launching innovations to improve their journey with us.’’
Cargo revenue was still a major contributor to the company’s performance, up 32% to $1 billion.
Additional flying under the New Zealand and Australian government airfreight schemes had contributed $403 million of that revenue.
With borders now largely reopened, the Australian scheme had ended, and the New Zealand scheme was tapering off and would conclude by the end of March 2023.
The underlying loss was higher than that expected by analysts at Jarden, which forecast an underlying loss before tax of $707 million.
While the heaviest fullyear loss of the pandemic, it is still dwarfed by the aftertax loss of $1.4 billion in 2001, when its Australian investment Ansett collapsed along with global aviation for a while after the 9/11 terror attacks.
Air New Zealand raised $2.2 billion from shareholders in May to recapitalise the business.
Mr Foran said the current environment was one of strong bookings despite ongoing challenges.
Earlier this month the airline cut its planned schedule and said it would operate 1.5% fewer seats than originally planned during the next six months.
The airline said it was taking proactive measures to protect customers’ travel plans as sickness caused disruption.
‘‘As we’ve been seeing overseas, travel demand is much stronger than anyone anticipated. But we’re operating in a very tight labour market with high fuel prices, tough economic conditions and the highest levels of employee sickness in more than a decade.’’
High booking levels were evident through July and August and corporate bookings were also trending closely towards preCovid levels, he said.
As of August 23, the airline had available liquidity of $2.3 billion including $1.9 billion in cash and $400 million of available funds on the unsecured standby loan facility with the Crown.
The cash balance included $200 million of issued redeemable shares, which the airline planned to redeem once its recovery was more advanced.
It was expecting total flying capacity to be in the range of 75% to 80% of preCovid levels in its 2023 financial year and anticipated a significant improvement in financial performance relative to financial year 2022.
But it gave no earnings guidance, citing uncertainty around volatile jet fuel prices, the risk of a global recession and inflationary pressure on costs.
Air New Zealand shares closed down 1c at 66c on the NZX yesterday. They have fallen nearly 30% in a year. —