Air New Zealand reports $213m profit as passenger demand rebounds

Air NZ reports $213m profit as passenger demand rebounds.
Air NZ chief executive Greg Foran. Photo credit: Getty Images

Air New Zealand says its recovery is well under way with a strong return to profitability and revenue growth.

The national carrier flew eight million passengers in the first half of the financial year, compared to three million for the same period last year, with domestic capacity at 94 percent of pre-COVID-19 levels, and international at 60 percent capacity, the company said.

Key numbers for the six months ended December compared with a year ago:

  • Net profit $213m vs $272m loss
  • Revenue $3.12b vs $1.13b
  • Underlying profit $299m vs $376m loss
  • Expenses $$2.41b vs $1.12b
  • No interim dividend.

Air NZ chief executive Greg Foran said the result was against a backdrop of significant labour, supply chain and operational pressures that had challenged the airline and the global aviation system.

Following three years of COVID-19-related losses, he said the result reflected sustained demand strength, particularly across the summer peak period, a return in business travel and overseas tourists, as well as cargo revenues above pre-COVID-19 levels.

"We know we have more work to do to tackle customer concerns like long wait times at our call centres, getting planes to depart and arrive on time, lost baggage and getting refunds back in a timely manner," Foran said.

"We're very aware that flying is not currently the pain-free experience it should be and getting back into shape is a key priority.

"On top of this, air fares are higher than they were pre-COVID-19."

He said the airline was dealing with a high inflation environment, with increased fuel, labour and other supplier costs which had increased ticket prices.

"A key focus for the team has been bringing back much needed capacity to minimise the impact of higher prices on customers."

He said six Boeing 777-300ER widebody aircraft were back in service, along with three new domestically configured A321neo aircraft and a fully crewed leased aircraft to serve the Auckland-Perth route.

"We are adding capacity back at pace."

Foran said the airline was also working to extend lease agreements, where appropriate, on existing aircraft and making tactical changes to the network to deliver an additional 2.7 million seats, or an extra 10,000 seats a day, for the coming northern summer period which runs from the end of March until the end of October.

"I'm incredibly proud of our people because, despite the challenges we've faced, we have fully reopened our international network, launched our flagship service to New York, and improved our onboard food service.

"We've also upgraded our mobile app, grown our Airpoints Store six-fold since 2019 and taken bold steps towards becoming a more sustainable airline."

He said the company recruited 2000 employees in the last six months, taking the total number of recruits to 3000 in the calendar year.

"As we look ahead to the second half of this financial year, macroeconomic challenges are front of mind, including the financial impact of inflationary pressures and geopolitical uncertainty."

Despite the uncertainty, the airline expected the full year underlying profit to be in a range of $450m to $530m, assuming an average jet fuel price of US$105 a barrel, as well as an estimate of costs associated with the Auckland floods and Cyclone Gabrielle.

While the company was not paying an interim dividend it said would consider the resumption of dividends at end of the financial year.