Air New Zealand’s interim net profit plunged 35.4 per cent in the six months to December 31, 2018 however the 2018/19 first half results provided no new surprises after its profit warning per month ago.
The business reported net profit after taxation of NZ$152m (A$145.7m) for the six months to December 31 2018down from NZ$232 ($A222.4m) in the prior corresponding period.
Regardless of the decrease the airline advised the Australian and New Zealand stock exchanges — the company is listed on both sides of the Tasman — which shareholders will receive a fully imputed dividend of 11 NZ cents (A10.5c) per share, in line with the prior period.
Operating revenue of $NZ2.9 billion grew up 7.1 per cent. Passenger revenue was $2.49 billion, up from $2.345 billion before, whilst freight revenue improved to $213 million, from $197 million in the prior half.
Meanwhile, operating cash flow was $475 million, down 0.8 per cent on the previous corresponding period’s $479 million.
Operating expenditure increased by $287m (14 percent ) compared to the previous period because of higher fuel prices, the impact of unfavourable foreign exchange moves and third party maintenance costs.
Air New Zealand revised its full year profit down January 30 due in part to a softening leisure travel market on New Zealand domestic routes.
It announced this week it would shrink its cheapest fares on 41 domestic routes by up to 50 per cent (with $39 the cheapest cost for a fare such as Auckland to Wellington), prompting Jetstar to announce the next day that it would beat any comparable flight by 10 per cent. 400 flights operates per day to 20 destinations.
Air New Zealand’s traffic figures provided a strong indication of the burning environment.
The figures revealed no change in underlying revenue per available seat kilometre (RASK) for short-haul traffic (New Zealand domestic and Tasman/Pacific paths ) in the seven weeks to January 31 (excluding foreign trade ). By comparison, long haul RASK in the exact same period was up 1.3 per cent.
The passenger load factor in New Zealand’s domestic market in January was also down 0.4 percentage points to 82.4 per cent, in comparison to 82.8 per cent in January 2018.
Air New Zealand chief executive Christopher Luxon stated he expected to give an update at the end of next month concerning the airline’s review of its system, fleet and cost-base in response to the slowing domestic market, noting that it was more consistent with other developed markets.
“Even though we continue to anticipate good growth across our markets we can’t ignore signals that the rate of expansion has slowed somewhat from prior decades,&rdquo.
Air and luxon New Zealand chairman, Tony Carter stated which gasoline costs, the airline’s price, increased by $179 million, or 38 percent .
Luxon and carter stated which recently established services to Chicago and Taipei had exceeded expectations with both destinations appropriate to excite additional traffic to New Zealand in addition to driving travel out of New Zealand.
The airline anticipated aircraft funding expenditure through to 2022 would be around $1.2 billion, with a vital component of that being deliveries of Airbus A320/321neos. It had recently received four Airbus A321neos which were operating on the Tasman and Pacific Island paths. More of those aircraft would be delivered in the remainder of the year.
Air New Zealand told analysts after the results announcement that the airline had been in a position to mitigate to some extent the disruptions caused by Rolls-Royce’s global remember of fault-plagued Trent 1000 engines for tests and fixes that are in its Boeing 787 aircraft.
It presently had two aircraft on the floor (at one time there were five) and anticipated the problem to ease in coming months and fully resolved by September 1.
Air New Zealand to seek JV with Air Canada
In other news, Air New Zealand and Air Canada have announced plans to seek regulatory approval.
The move to broaden the present codeshare partnership comes as Air Canada announced on Wednesday (Canadian time) plans to operate a seasonal four times every week Auckland-Vancouver nonstop service between December 2019 and March 2020 with Boeing 787-8 equipment.
Air Canada places its AC airline code on Air New Zealand’s Auckland-Vancouver flights.
Air Canada and Air New Zealand have a partnership that was close, with been codeshare and Star Alliance partners for over 20 decades,” Air Canada vice president for global sales and alliances John MacLeod said in a statement.
“We look forward to optimising our trans-Pacific that is far-reaching network collaboration and deepening our connection, offering our customers a choice of more flights, relations and travel opportunities. ”
VIDEO: Check out final gathering of Air New Zealand’s original A321neo from the airline’s Youtube station .