Air New Zealand profits take a dive

Wellington (AFP) –


Air New Zealand announced a 31 percent fall in annual net profit Thursday due to higher fuel prices and waning domestic demand.

The flag carrier said net profit to the end of June was NZ$270 million ($173 million), down from NZ$390 million a year earlier.

Chairman Tony Carter, who launched a review of the airline's operations after a profit downgrade in January, described the result as "solid".

"While we are disappointed that we did not meet the expectations we first set for ourselves at the start of the financial year, the fact is we are operating in a different demand environment than we were 12 months ago," he said.

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

The airline, which announced a final dividend of 11 cents, said operating revenue was up 5.3 percent to NZ$5.8 billion.

Earnings before taxation, the airline's preferred performance measure, fell 31 percent to NZ$374 million.

It predicted pre-tax earnings of NZ$350-450 million in the current financial year.

The airline forecast growth of seven to eight percent in its long-haul operations, stimulated by new destinations Seoul and Chicago, as well additional capacity to Taipei and Singapore.

Air New Zealand shares were steady after the announcement, edging down one cent to NZ$2.72 on the New Zealand bourse.