Air New Zealand and Qantas are expected to report contrasting financial results tomorrow. Photo by Reuters.
Air New Zealand is expected to deliver a much improved
reported profit when it releases its financial results
tomorrow, Forsyth Barr broker Andrew Rooney said.
He expected the company to report an underlying profit of
$125 million for the six months ended December, up 26% on the
previous corresponding period.
The profit increase would be driven by further efficiency
In mid-December, Air NZ management provided guidance to a
before-tax profit for the period of more than 20%, inclusive
of $10 million redundancy costs.
''We think the key investment issues investors should
consider at the result include: revenue flat but mix
favourable; cost containment; and a stable outlook with more
of the same to come.''
In contrast, Australia's national carrier is expected to
report a loss of about $A300 million ($NZ325 million)
Qantas yesterday refused to confirm or deny reports it could
axe up to 5000 jobs as part of its efforts to find $A2
billion of savings.
The airline had previously announced 2000 job losses with
1500 of those jobs expected to come from the company's
executive and support divisions.
News Corp Australia reported yesterday Qantas was looking to
sell its Melbourne Airport and Brisbane Airport leases.
Qantas said in a statement there was fresh speculation about
what things it would or would not announce as part of its
''We are not in a position to comment on that speculation.''
However, the airline acknowledged it would make some ''tough
decisions'' as part of a cost-cutting programme.
Qantas had been lobbying the Federal Government for
assistance, most likely in the form of a debt guarantee.
Mr Rooney said Air NZ's operating statistics for the six
months to December highlighted that revenue was flat against
the pcp during the first half of the year while up around 2%
on a constant currency basis.
Short-haul yields were down 1.3%, reflecting increased
stimulation for domestic services, given increased capacity.
Air NZ is considering cutting routes from its
Dunedin-Auckland schedule and airline representatives have
been asked to the city to meet business leaders and hear
Mr Rooney said cost containment had been a feature for Air NZ
in recent periods.
A further fall in cost per available seat kilometres was
expected to be driven by labour and maintenance cost
improvements. In addition, the company was benefiting from
improving fleet efficiencies as it introduced more A320s to
replace the ageing Boeing 737 fleet, he said.
Fuel price stability was captured in the current fuel hedging
profile of Air NZ. That was supportive to management's
near-term planning and potential for value optimisation.
The softer Australian dollar would drag on the airline's
yields, but not significantly.
Forsyth Barr was forecasting a slight fall in Air NZ's sales
revenue of 0.8% to $2.35 billion, a rise of 6.3% in operating
earnings to $493.1 million and a 50% rise in dividend to 3c