James Costello

Air NZ profit soars as Qantas announces massive loss

AIR NZ has this morning unveiled a record interim financial result for the first half of the 2014 financial year.

The airline says its net profit after tax was $140m - a 40 per cent jump on the same period the year before.

See a presentation outlining the latest profit result here.

It has hiked its interim dividend by 50 per cent and will pay out 4.5 cents per share to shareholders.

With stable fuel prices and a traditional seasonal earnings pattern of a stronger first half, Air NZ now expects to deliver full year profits of more than $300m.

The Government sold down a 20 per cent stake in the airline in November last year, as part of its partial privatisation plan for state owned assets. This raised $365m, taking the Government's ownership in Air NZ down from 73 per cent to 53 per cent.

Chief executive Christopher Luxon said the hard work of the airline's 11,000 staff had placed the airline in a position where it was able to adapt to a changing economic and competitive environment.

A good economic outlook in the airline's 'key revenue markets' was good news, said Luxon, with the airline well placed with new planes arriving soon.

"We expect to deliver capacity growth of around 8 per cent in the 2015 financial year as new Boeing 787-;9s and 777-300s enter our fleet from the middle of this calendar year. Additionally, new Airbus A320 and ATR72-600 aircraft will be growing capacity in our domestic network over the next year."

Luxon said the combination of a competitive cost base and economies of scale achieved through growth will be a material benefit for Air New Zealand in the coming years.

"We have worked hard on improving our cost base in an environment where we have not grown. In fact, we have reduced our capacity flown overall as we realigned our long-haul network. With new fleet additions and capacity growth, our scale grows. Our new aircraft will be significantly more efficient than those they replace and having fewer aircraft types drives unnecessary complexity out of our operations."

Luxon said a highlight of the first six months of the 2014 year was the continued strength of its alliances.

"Through our alliance partnerships we are able to offer more connections, frequencies and destinations than every before," said Luxon.

Air NZ and Singapore Airlines recently announced a deep alliance, which would mean Air NZ returning to Singapore and plugging into Singapore Airline's Asian network.

Its part share in Virgin Australia has been blamed as one of the reasons for the current financial plight of Qantas. That airline is tipped to announce a big loss today, with the potential for thousands of job cuts.

Eamon defends use of Stilnox: Eamon Sullivan defends use of the sedative Stilnox.
Eamon defends use of Stilnox: Eamon Sullivan defends use of the sedative Stilnox.