Air NZ kicking goals, drops fares, tops profits

Air NZ kicking goals, drops fares, tops profits

Air New Zealand has hit the ground running in 2015.

The airline group announced a record NZ$327 million net profit after tax in the last financial year. Jumping up by 24%, the net profit after taxation is a product of capacity growth and strong demand, cost efficiencies and lower fuel prices.

The airline’s normalised earnings before taxation also skyrocketed by 49%, sitting at NZ$496 million for the 2015 financial year. Air NZ’s operating cash flow proved another strong asset, hitting $1.1 billion, up 51% on the previous year.

The airline’s chief executive officer Christopher Luxon said a continued focus on superior commercial results, enhancing customer experience and developing the airline’s people and culture have resulted in a terrific 2015 financial year.

“We remain focused on the Pacific Rim as our growth strategy and will continue to provide the best connections, product and service at competitive prices, to maintain and grow our market share in these regions,” Luxon said.

“Next year will see further capacity growth in international markets as we look forward to new routes starting in December 2015 to Houston and Buenos Aires.  And while we are gearing up to launch these exciting new routes we have a team assessing potential new opportunities in Australia, Asia and the Americas.”

The results of the airline’s finances do, however, include equity accounted losses of $29 million from Virgin Australia, but Air NZ is still intent on pushing into the Aussie market.

“The reality for us is with Virgin we compartmentalise our relationship with them,” Luxon said, referring to Virgin’s alliance with Air NZ on trans-Tasman routes but Delta Air Lines on trans-Pacific routes.

“We look at it and we think there are bits of Australia underserved in connecting to North America and South America. The national carrier [Qantas] has become more focused around Sydney.”

Luxon also added that domestic operations will grow 8% in the year ahead, to combat the competition from Jetstar in its home territory.

“We operate one of the most comprehensive domestic jet and regional turboprop networks in the world renowned for frequency, service and reliability,” he added.

“Our domestic operation will grow 8% in the year ahead, while at the same time maintaining our price leadership with more than two million domestic fares expected to be offered for sale for less than $100.”

Air New Zealand’s loyalty programme, Airpoints, continues to grow at pace with around 1.9 million members now, which is up almost 17% on the previous year.  Australia remained the biggest overseas membership base with growth in that market exceeding 20% during the year.

“This doesn’t surprise us as more Australians than ever are embracing the Air New Zealand product and service offering whether it be on the Tasman, to the Pacific Islands, North America or South America.”

The Board has declared a fully imputed final ordinary dividend of 9.5 cents per share, an increase of 73% on the prior year, resulting in a 2015 full year ordinary dividend of 16.0 cents per share, an increase of 60% on the prior year.

“Our strategic initiatives over the past three years have positioned us well to take advantage of market dynamics which have contributed to these results,” Chairman Tony Carter said.

“Our investment in new efficient aircraft, the continued development of our alliance partner relationships, world class sales and marketing execution, great customer service and strong focus on cost management have enabled Air New Zealand to achieve revenue growth against a stable cost base.

The stellar profit comes just Air New Zealand and Cathay Pacific announced the continuation of their strategic agreement on the Auckland to Hong Kong route until 2019.

The strategic agreement has been operating since January 2013 and has already delivered a range of benefits to customers travelling between New Zealand and Hong Kong including the choice of up to three frequencies per day, reciprocal frequent flyer benefits and enhanced connectivity to and from both carriers’ networks.

Luxon added that the cooperation with Cathay plays an important part in the airline’s Pacific Rim strategy.

“This agreement has not only let Air New Zealand broaden its offering to customers between New Zealand and Hong Kong but has also allowed us to offer our customers excellent access to destinations throughout China and North Asia on Cathay Pacific and its sister airline Dragonair,” Luxon added.

“In turn our agreement has also allowed us to stimulate inbound tourism to New Zealand from these markets.”

Email the Travel Weekly team at traveldesk@travelweekly.com.au

@australia air new zealand cathay pacific christopher luxon jetstar new zealand pacific rim qantas virgin australia

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