Air New Zealand meets brokers' expectations

New Zealand's national carrier Air New Zealand met brokers' financial expectations when it yesterday reported its profit for the six months ended December 31.

The company reported profit before tax of $96 million, up $70 million on the previous corresponding period.

The company had closing net cash at $1.1 billion at balance date.

Net gearing, including capitalised operating leases, remains relatively low for the airline industry at 46%.

A fully imputed interim dividend of 3c per share will be paid.

Forsyth Barr broker Tony Conroy said the airline had flown through the global financial crisis in great shape.

"The most encouraging aspect from the first-half result was that Air NZ has successfully traded itself through one of the most volatile periods of global travel demand and fuel prices.

"We are very happy with Air NZ's first-half profit performance.

"It sets earnings at a reasonable base level ahead of a general improvement in demand for global tourism that is anticipated over the next few years."

Forsyth Barr would be making adjustments to its forecast and at this stage, the first-half result had given brokers greater confidence in their medium-term targets, Mr Conroy said.

Air NZ chairman John Palmer said the company produced a good result in very challenging conditions.

There had been a stabilisation and recovery of the trading environment, although demand and average fares still remained significantly lower than previous periods.

"The challenge remains to improve passenger numbers and yields."

In recent periods, the volatility of fuel prices and foreign exchange rates had overshadowed the natural seasonality of Air NZ's business.

Mr Palmer expected a more normal seasonal balance this year with the second half weaker than the first.

If current exchange rates continued, there would be a foreign exchange hedging loss of around $20 million in the second half compared with a gain of $24 million in the first half.

However, the business was expected to remain profitable in the second half.

Mr Conroy said Air NZ's balance sheet remained in good shape ahead of the fleet renewal plans over the next few years for B777-300s, the A320s and further out, the B787-9s.

 

Add a Comment