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International profit lifts Air NZ


International profit lifts Air NZ

Air New Zealand turned in its best half year result for five years after lifting pre-tax normalised earnings by 300% to NZ$139 million, helped by a return to profitability of its international division.

Net profit after tax climbed from NZ$62m to NZ$100m, boosted by a 3.4% increase in operating revenue to NZ$2.4 billion.

Revenue from its Australia and Pacific Island operations rose NZ$9m to NZ$369m.

"This is a strong profit growth story against the backdrop of a sluggish economic recovery and ongoing challenges facing our industry," chairman John Palmer said. "This is the best interim profit result for five years."

Long haul yields and demand rose during the half year to December which helped push its international division into the black for the first time since the Global Financial Crisis.

Demand also climbed across its domestic network while the Seats to Suit fare structure on Tasman flights - and the wider alliance with Virgin Australia - has been successful, the carrier said.

"The Tasman and Pacific remains a critical part of the network," chief executive Christopher Luxon said. "Our alliance with Virgin Australia is proving very successful, giving us a combined market leading position on the Trans-Tasman routes. Our ownership of 19.99% in Virgin Australia reinforces this relationship."

Luxon, presiding over his first financial results since taking over from Rob Fyfe, said a key driver in turning round its troubled international flying was "getting our network right", which included the axing of its struggling Hong Kong to London service.

"Our solution was to enter into an alliance agreement with Cathay Pacific whereby our customers retain the option of travelling to London via Hong Kong as well as gain access to new destination," Luxon said. "The existing capacity will be quickly redeployed to growth markets where we are experiencing strong demand."

Long haul yield climbed 3.8% with demand, measured in revenue passenger kilometres, increasing 3%.

Buoyed by the performance, Luxon said the carrier is in "growth mode" and will lease two additional Boeing 777-300ER aircraft in 2014.

Based on demand forecasts and current fuel prices, Air NZ said second half earnings "should comfortably exceed" last year.


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