Air New Zealand posts record annual profit

Air New Zealand boss Christopher Luxon has hailed the airline’s “superior commercial results” after it increased earnings by 49 per cent to $496 million before tax for the 2015 financial year.

Air New Zealand announced Wednesday its profit after tax was 327 million New Zealand dollars (US$212 million) for the year ended in June.

Net profits rose 24% to NZ$327m, while revenues increased 5.9% to NZ$4.9 billion.

Air New Zealand, which is making a concerted push to fill its planes to North and South America with more Australian passengers, has accused rival Qantas Airways of acting like “Air Sydney” due to its relative lack of trans-Pacific flights from other Australian cities.

“We don’t lose to Australians at home”, said Air New Zealand chief executive Christopher Luxon of competition with Jetstar.

“We are already starting to talk about how we would get increased capacity into those routes”, Luxon said.

“Our strategic initiatives over the past three years have positioned us well to take advantage of market dynamics which have contributed to these results”, said chairman Tony Carter.

“Our investment in new efficient aircraft, the continued development of our alliance partner relationships, world class sales and marketing execution, great customer service and strong focus on cost management have enabled Air New Zealand to achieve revenue growth against a stable cost base”.

The airline’s shares last traded at $2.65 and have risen 35 percent in the past year.

“We indicated at our interim result that lower fuel prices and current sales momentum have strengthened the company’s outlook, and this has seen the delivery of a record annual result that our shareholders and staff can be immensely proud of”, he said.

The carrier has recorded a fourth straight year of earnings growth.

Air NZ is facing some headwinds ahead with its stranglehold on the domestic regional market set to end with Jetstar’s expansion.

He said Virgin would benefit from Air NZ gaining more market share in Australia because that traffic was carried via trans-Tasman routes that are part of their alliance. Here are five reasons behind the bumper result.

Air New Zealand’s loyalty programme, Airpoints, continues to grow at pace with around 1.9 million members now, which is up nearly 17 percent on the previous year. Airlines can lose money quickly when they put extra capacity into the market that’s not matched by the number of passengers.

It too pointed to lower fuel prices and cost cutting; it had saved $894 million over the past year in cost reductions which allowed it to pay down more than a SA1 billion in debt.

Air NZ has forecast capacity growth of 11 per cent across its domestic and global network for the full 2015/16 financial year. Revenue is up $30 million to $317 million.