WELLINGTON: The airline has announced a 20 per cent increase in interim normalised earnings before taxation to a record $216 million, although its statutory net profit slipped 6 per cent to $133 million after a 26 per cent lift in tax paid.
Shares in the company jumped by 18.5c per cent to close at $2.76 yesterday after it said its full-year result would be stronger than indicated last November. The airline will pay a dividend of 6.5c a share, up 44 per cent on the previous corresponding period. While the fuel benefit added up to savings of just $22 million during the past six months due to hedging, it stands to benefit by almost four times that over the second half of the financial year. It does not get the full benefit of fuel savings until the 2016 financial year, when it could save $249 million, assuming a jet fuel price of US$76 a barrel.
Chief executive Christopher Luxon said competitors were benefiting from fuel savings as well, depending on their hedge position. “We’re still a relatively small airline – there are lots of larger, better-resourced competitors that want to hurt us,” Luxon said. “The reality is there are a lot of airlines around the world that aren’t quite as efficient or as fit as Air New Zealand. With those, the fuel benefits flowing through can lead to a lot more competitive activity.”
Qantas is likely to announce a dramatic turnaround in its fortunes after last August announcing a full-year pre-tax loss of A$646 million. One analyst says the underlying pre-tax profit could be as high as A$1 billion. Air New Zealand is adding 12 per cent more capacity in the current half-year as it enters a phase of what Luxon said was unprecedented growth. Its return to Singapore was a big contributor to that and it would start three-times-a-week services to Argentina late this year. “There’s no doubt that it’s going to get much more competitive,” Luxon said.
