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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 gains.
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) tomorrow.
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 half-year results.
''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 their concerns.
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 per share.