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The national carrier, in which the Government owns a majority share, yesterday reported an operating profit of $464 million for the period, up from the $363 million reported in the previous corresponding period (pcp).
In its release to the NZX, the company made much of its ''normalised earnings'' before taxation rising more than 300% to $139 million from $33 million in the pcp.
However, an analysis of the financial accounts showed that in the current period, Air NZ made a gain of $3 million on its foreign exchange compared with a $46 million loss in the pcp - a turnaround of $49 million.
Also, the company booked more depreciation and amortisation in the period at $203 million, from $171 million, helping the reported profit rise to $100 million from $38 million in the pcp.
Air NZ made some improvement in its operating revenue, increasing it to nearly $2.4 billion in the period from $2.3 billion in the pcp. And it also cut costs by $232 million in the period.
But most of the company's interim improvement came straight from the improvement in foreign exchange hedging.
The company increased its interim dividend by 50% to 3c per share (cps) meaning the Government will receive $24.1 million from its investment in Air NZ.
Craigs Investment Partners broker Chris Timms described the result as ''sound'' and said Air NZ had made good progress.
''When they talk about the much improved profit, not all of that is from operations. With hedging, they have to be doing the right thing as it is such a big part of their business,'' he said.
Air NZ chairman John Palmer said the company had made ''excellent progress'' when put against the backdrop of a sluggish economic recovery and ongoing challenges facing the airline industry.
''This is the best interim profit result for five years. The substantial change programme the airline has been implementing has positioned the business for consistent growth and sustainable profitability over the coming years.''
New chief executive Christopher Luxon said the airline had experienced increased demand on its domestic routes, despite a slower-than-expected economic recovery. It had been pleasing to see regional New Zealand take up the airline's commitment to more deals every day.
The Tasman and Pacific Islands remained a critical part of the airline's network, he said. For the first time since the financial crisis, the international long-haul part of the network was profitable.
Mr Palmer said that based on the company's current forecast of market demand and fuel prices at present levels, the expectation that earnings before tax for the second half would ''comfortably'' exceed the previous corresponding period.
At a glance
• Operating revenue: $2.37 billion
• Operating expenses: $1.9 billion
• Foreign exchange gain: $3 million
• Operating profit: $464 million
• Reported profit: $100 million
• Dividend: 3cps