Air New Zealand profit soars

Air NZ said it is going to offer free in-flight Wi-Fi on some flights (file, Reuters)
Air NZ said it is going to offer free in-flight Wi-Fi on some flights (file, Reuters)

Air New Zealand has announced another big increase in profit.

Its net six-month profit has increased by 154 percent to $338 million.

That was helped by an increase in passenger numbers and lower aviation fuel prices.

Pre-tax earnings increased 132 percent to $457 million.

The airline says the result was driven by "exceptionally strong passenger revenue growth, underpinned by over 16-percent capacity growth across the network."

It says it also benefited from lower aviation fuel costs and from its "fleet simplification program".

The airline, which is majority-owned by the New Zealand Government, is increasing its six month dividend to shareholders by 54 percent to 10 cents per share.

It is forecasting a full-year pre-tax profit of $800 million.

"Looking forward, Air New Zealand's growth strategy will continue to benefit customers, employees and shareholders," says Air New Zealand chief executive Christopher Luxon.

"Our network will provide more frequency, more routes and competitive prices throughout New Zealand and the Pacific Rim, combined with modern aircraft offering better operating economics."

But analysts say lower fuel prices are also giving Air New Zealand's rivals a boost and will mean more competition for the airline.

United Airlines, American Airlines, AirAsia, Jetstar and Singapore Airlines have already announced new routes that will compete directly with Air New Zealand.

United Airlines is flying from San Francisco to Auckland. Hawaiian Airlines is flying from Auckland to Honolulu.

A major challenge will be American Airlines' decision to resume flying between Auckland and Los Angeles. It is partnering with Qantas.

Qantas this week announced a record six-month profit of Australian $921 million. That was due in large part to the fall in the price of aviation fuel. A lower fuel bill saved the company AU$448 million.

Air New Zealand says from June it will be offering seasonal flights to Vietnam.

It has already launched flights to Houston and Buenos Aires and is partnering with Air China on flights to Beijing.

"We are thrilled with the demand and performance of these routes," says Mr Luxon.

The airline is facing added competition from Jetstar on domestic routes.

"We have received tremendous response to our expansion in the domestic market with passenger demand up 10 percent in the period and more importantly, great feedback on our larger ATR turboprop aircraft in the regional markets," says Mr Luxon. "We continue to look for ways to improve the experience of our customers, and I am very excited about the new scheduling changes that will take effect in the coming months.  These will reduce complexity and create greater customer choice by improving connectivity, consistency and frequency across the domestic and regional network."

The airline says its flights across the Tasman and to Pacific Island markets continue to "perform strongly".