Chief executive Christopher Luxon said the national carrier's record result stacked up against any airline in the world, and was underpinned by strong demand, cost efficiencies and cheaper fuel.
The company reported statutory earnings before taxation of $474 million for the year, up 32% on the $358 million reported in the previous corresponding period.
Normalised earnings before tax were up 49% to $496 million from $332 million, and the statutory profit after tax was up 24% to $327 million from $263 million. Revenue rose 6% to $4.9 billion from $4.6 billion.
A final tax-paid dividend of 9.5c per share was declared, an increase of 73% on the pcp. The total dividend rose 60% to 16cps.
Chairman Tony Carter said the strategies adopted during the past three years had positioned Air NZ well to take advantage of market dynamics.
The investment in new, efficient aircraft, the continued development of alliance partner relationships, world class sales and marketing execution, great customer service and a strong focus on cost management had enabled Air NZ to achieve revenue growth against a stable cost base.
''We indicated at our interim result lower fuel prices and current sales momentum have strengthened the company's outlook and this has seen the delivery of a record annual result our shareholders and staff can be immensely proud of.
''Given the current known operating environment, along with our increased capacity and improved operating efficiencies, we expect to achieve significant earnings growth in the coming year,'' Mr Carter said.
Mr Luxon said Air NZ remained focused on Pacific Rim growth and the airline would continue to provide the best connections, product and service at competitive prices, to maintain and grow its market share in that region.
Next year, there would be further capacity growth in international markets, with new routes starting in December to Houston and Buenos Aires.
''While we are gearing up to launch these exciting new routes, we have a team assessing potential new opportunities in Australia, Asia and the Americas.''
The domestic operation would grow 8% in the year ahead, while at the same time offering price leadership with more than two million domestic fares expected to be offered for sale for less than $100, he said.
Air NZ's loyalty programme, Airports, continued to grow, with about 1.9 million members now, up nearly 17% on the previous year. Australia remained the largest overseas membership base, with growth in that market exceeding 20% during the year.
''This doesn't surprise us as more Australians than ever are embracing the Air NZ product and service offering, whether it be on the Tasman, to the Pacific Islands, North America or South America.''
Forsyth Barr broker Andrew Rooney said the strong result was principally driven by increased passenger traffic, higher yields and lower fuel costs. Operating costs remained in check, with cost per available seat kilometre flat for the year. Inflationary pressures were offset by better efficiency and economy.
Air NZ's share price had stalled in the past six months, partly due to increased competition, he said.
However, fuel prices had improved significantly in the past two months. That would drive strong profit growth, particularly in the first half of the 2016 financial year.
''We see potential to lift our 2016 earnings forecasts but recognise Air NZ is now coming towards the end of its upgrade cycle. While we see near-term share price upside potential, we are becoming more cautious on a 12-month horizon,'' Mr Rooney said.
