Air NZ forecasts earnings hike

Air NZ forecasts earnings hike

Air New Zealand expects annual earnings to rise by as much as 60 per cent, with benign trading conditions continuing into the second half of the year.

The shares gained 2.2 per cent to $2.58 in Wednesday trading.

The Auckland-based airline forecasts normalised pre-tax earnings of between $520 million and $530m in the 12 months ending June 30, up from $332m a year earlier, it said in a statement.

The guidance excludes equity earnings from its stake in ASX-listed Virgin Australia, which dragged on the airline’s bottom line in the first half of the financial year.

“The strong earnings momentum has continued in the second half of the year,” Air NZ said.

“The board has reviewed the FY16 financial plan and, given current known circumstances, the company continues to target earnings growth for the coming year.”

Air New Zealand’s first half result was bolstered by increased passenger numbers and lower fuel costs, something that’s carried on into the rest of the financial year.

The airline on Wednesday said passenger numbers were up 4.2 per cent to almost 13 million in the year ended May 31.

The upbeat forecast comes as the national carrier faces heightened competition on domestic routes, with Qantas Airways subsidiary Jetstar unveiling plans to expand into at least four regional destinations later this year.

Air New Zealand has said it will not be undercut on prices on the regional routes and was “ready for the battle”.

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