Higher interest and depreciation costs associated with the terminal redevelopment cut into Dunedin International Airport's profit for the year ended June.
The company yesterday reported a loss before tax of $328,459 for the period, a turnaround from the $159,208 profit before tax in the previous corresponding period (pcp).
The after-tax profit was $324,236 after the company received a tax credit of nearly $11,000 but had to offset that with $6676 of deferred tax payment.
Last year, the company reported an after-tax profit of $324,847, after paying $68,348 in tax and receiving a deferred tax adjustment of $233,987.
Total assets grew 26% to $61.9 million, helped by a revaluation of the company's assets.
Net operating cash flow was $1.9 million.
Chairman Richard Walls regarded the year as another successful one for the company, with total revenue reaching a record high of $7.65 million, $1.1 million above budget.
The decrease in Freedom Air flights in the reporting period affected both aeronautical and non-aeronautical revenue.
The new Air New Zealand transtasman flights, which replaced those operated by Freedom at the end of March, resulted in an overall increase in flights with three return flights a week to Sydney and four return flights a week to Brisbane.
The flights to Melbourne would operate again during the 2008-09 summer.
"The company regards the introduction of full Air NZ services on the transtasman and the addition of Dunedin to its international schedules as a positive step for the future."
Dunedin Airport would work with Air NZ and Tourism Dunedin to increase passenger numbers on the Sydney flights so the ultimate object of "Project Gateway" - a daily return service - was achieved as soon as possible.
It was encouraging that Air NZ was leasing space and equipping flight-kitchen facilities at the airport, he said.
International passenger numbers fell nearly 12% in the reporting period to 70,287, with the fall directly linked to the decrease in frequency and capacity provided, Mr Walls said.
Domestic passenger numbers grew 2.6% in the year to 638,219.
During the year, Air NZ altered its flight schedules, adding capacity and increasing direct flights to and from Wellington and Auckland, with a slight reduction in those to and from Christchurch.
"The major risk for the company of decreasing passenger numbers will be driven by external factors, including the general economic situation in New Zealand, job losses from any major businesses moving out of the city or closing down, higher interest rates and lower discretionary income. All are major concerns," Mr Walls said.
The commitment of the company, the Dunedin City Council, the Otago Chamber of Commerce and Tourism Dunedin to Project Gateway remained a key driver for growth in international passenger numbers, he said.
The continued challenge for the company was to maintain growth rates in the future by potentially increasing the number of destinations that could be directly reached from Dunedin, such as the South Pacific, and increasing the flight schedule to better suit business travellers to destinations such as Melbourne and Sydney.
