Air New Zealand expects second highest annual profit as it heads to Taipei

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February 22, 2018
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Air New Zealand announced Thursday it would start non-stop flights between Auckland and Taipei from November as it revealed a 9.4 percent fall in half-yearly net profit to $NZ232 million.

But the company expects a second-half boost will see its annual results exceed last year’s and says it is on track for the second-highest profit in the company’s history.

Chairman Tony Carter said Air New Zealand was optimistic about the overall market dynamics for the rest of the financial year.

“Based upon the current market conditions and despite the increased price of jet fuel, the Company is still expecting 2018 earnings before taxation to exceed the prior year,” he said.

Read: World’s Best Airlines 2018

The Kiwi carrier’s pre-tax earnings for the six months to December dropped to $NZ323m from $NZ349m, despite a 5.6 percent increase in operating revenue it attributed to robust demand across all markets and “particularly strong growth in the short-haul network”.

Passenger revenue reached an all-time record for an interim result of $NZA2.3 billion as the airline declared an interim dividend of 11 NZ cents per share.

Carter said the result demonstrated the airline’s resilience despite an 18 percent increase in fuel price.

“This high-quality interim performance was driven by robust passenger demand and revenue growth, reflecting the airline’s strong position in New Zealand and throughout our Pacific Rim network,”  he said

Chief Executive Officer Christopher Luxon said 2018 was shaping up to be another exciting year of growth for Air New Zealand.

“The domestic market continues to show strength driven by the New Zealand economy as well as inbound tourism, and we will be increasing capacity approximately six percent across our regional and jet services to support that demand over the second half of the financial year,’’ he said.

“ The Trans-Tasman and Pacific Island routes have also responded strongly to additional wide-body services and targeted capacity increases.

“Finally, our alliance partnerships continue to drive value across our international long-haul network, and have been a key factor in our ability to effectively compete against much larger airlines.”

The Kiwi airline is predicting improved asset utilization in the second half will provide about 6 percent capacity growth on domestic markets, 14 percent on the Tasman and Pacific Islands and 5 percent on international long-haul routes.

The new Tapei route will be Air New Zealand’s seventh destination in Asia and is part of the airline’s strategy of connecting the Pacific Rim to New Zealand.

It will operate the route up to five times a week using its Boeing 787-9 Dreamliners.

“Air New Zealand’s new service is significantly quicker and more convenient than current indirect options,’’ Luxon said. “ New Zealand already welcomes around 36,000 visitors a year from the Taiwan market and we’re confident a direct link will grow numbers further.”

The airline revealed it is targeting replacement of its Boeing 777-200 fleet from 2022 with aircraft selection currently underway.

It is also in the final stages of confirming a new operating lease for an additional B787-9 aircraft, bringing the total forecast fleet to 14 by the end of the 2020 financial year.

This would include 12 owned Dreamliners and two that are leased. It currently has 11 of the fuel-efficient planes with two to be delivered in 2019.