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Air New Zealand Reports Half Year Interim Profit of $198M, Maintains Dividend

Air New Zealand reported an interim profit of $198M on Thursday for the six months ending December 31, 2019, compared to $217M for the same period during the previous fiscal year. The carrier earned $139M before taxes and posted a net profit of $101M after taxes.

Air New Zealand Airbus A321neo - Courtesy Airbus

On Thursday, Air New Zealand reported and interim profit of $198M for the six-month period ending January 21, 2020, compared to $217M the previous year. The carrier attributed the decline to lower demand, cargo weakness and the ongoing unrest in Hong Kong, but affirmed that their interim dividend would remain in place. Earnings before taxes were $139M, with a net profit after taxes of $101M. Operating revenue grew 3 percent to $3.0B, driven by domestic and Pacific island demand, while operating costs grew 3.5 percent on a weaker NZ dollar and increases in air navigation and landing charges. Fuel costs increased 1.1 percent and ownership costs rose 7.1 percent driven by the arrival of new aircraft, including the arrival of the carrier’s 14th Boeing 787-9 Dreamliner. In Thursday’s announcement, Air New Zealand’s Chairman, Dame Therese Walsh said,

“Our capacity discipline on existing routes, stimulation of leisure traffic with the domestic fare restructure and entrance into attractive new international markets has driven good revenue performance in the first half. Alongside our focus on profitable top-line growth, we are on track to deliver the long-term sustainable cost savings target for our business review initiatives. While the Covid-19 situation is dynamic, we have taken immediate steps to mitigate the impact of softer demand and I am confident that we have the ability to manage the expected short-term impacts effectively.”

Air New Zealand’s board has declared a fully imputed dividend of $0.11/share which will be paid on March 25th to shareholders of record as of March 13, 2020. Also commenting on Thursday’s announcement, Air New Zealand’s Chief Executive Officer, Greg Foran added,

“As I travel around various parts of the business, it is clear what makes Air New Zealand stand out from its global competitors is the enthusiasm and dedication of our people. Their focus on providing our customers with the best service will continue to be a key differentiator as we look to set the airline up for future success. Air New Zealand holds a special place in the hearts of New Zealanders, and we take that responsibility very seriously. As such, the diagnostic of the airline will look at how we can drive long-term sustainable outcomes for our customers, our staff, the broader community and our shareholders.”

Although the COVID-19 situation remains uncertain, Air New Zealand expects an impact to second half earnings of between $35-75M. In the video below, Air New Zealand’s Chief Financial Officer, Jeff McDowell, discusses first half results and the outlook for full-year earnings.

Source: Air New Zealand


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