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Air New Zealand profit down 90 pct, bumpy outlook

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National carrier Air New Zealand said there are signs demand for travel is stabilising but the environment remains turbulent as it reported a 90 percent fall in profit on Thursday.

The airline said the global recession had hit air travel hard and it has been cutting jobs and capacity to cope with lower passenger numbers.

“This result positions Air New Zealand as one of the top airline performers globally but it falls short of delivering shareholders an appropriate commercial return,” Chairman John Palmer said in a statement.

The airline said normalised profit before tax fell 26 percent to NZ$145 million, with losses on fuel hedging being partially offset by gains from foreign exchange movements.

Air New Zealand posted a net profit of NZ$21 million ($14.3 million) for the year ended June 30, compared with NZ$218 million last year.

The company declared an unchanged final dividend of 3.5 cents per share.

Air NZ shares, 77 percent owned by the New Zealand government, closed on Wednesday at NZ$1.25. So far this year the stock has risen around 32 percent, compared with a near 14 percent gain in the benchmark NZSX-50 index .NZ50.

The airline dominates the domestic markets, where it competes on main routes with Australian airlines Virgin Blue (VBA.AX) and Qantas Airways Ltd’s (QAN.AX) low cost offshoot Jetstar.

Over the year passenger demand fell 7.6 percent, but also reduced the amount flown — seat kilometres — by 7.2 percent.

Last week, Qantas reported its annual profit falling 88 percent as it fell into a loss in the second half, although it said there were early signs of a pick-up. [ID:nSYD352340] ($1=NZ$1.47) (Reporting by Adrian Bathgate)

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