Thursday July 31, 2014

Air New Zealand ‘goes beyond’ with record result

Air New Zealand's profits are all in the black . (Air New Zealand)

Air New Zealand’s profits are all in the black . (Air New Zealand)

Air New Zealand has posted a record profit before tax of NZ$197m (A$181.8m) for the first half of the 2014 financial year, a result it attributes to its ‘Go Beyond’ strategy and stable fuel prices.

Normalised profit before tax for the half was NZ$180m (A$166m), up 29 per cent, while net profit after tax was NZ$140m (A$129m), up 40 per cent, on revenues of NZ$2.3bn (A$2.1bn). The airline says it expects to post a full-year normalised profit of over NZ$300m (A$277m).

“Air New Zealand’s Go Beyond strategy is clear. We have a relentless focus on global sales and marketing excellence, combined with a keen eye on continuously improving our cost base while delivering a world class customer experience,” chairman Tony Carter said.

“As we continue through a period of strong earnings growth, we are demonstrating that we can deliver increasing returns to shareholders.  Our improved commercial results are also enabling us to invest in the customer experience, explore new markets and invest in our people and culture,” said chief executive Christopher Luxon.

“We have worked hard on improving our cost base in an environment where we have not grown. In fact, we have reduced our capacity flown overall as we realigned our long-haul network. With new fleet additions and capacity growth, our scale grows. Our new aircraft will be significantly more efficient than those they replace and having fewer aircraft types drives unnecessary complexity out of our operations.”

Highlights of the result include: unit costs down by three per cent; planned capacity growth for the 2015 financial year of eight per cent as 787-9s and new 777-300s are delivered, and a fully imputed dividend of NZ4.5 cents a share.

Luxon also pointed to the strength of the airline’s alliance partnerships. “Forming the right alliances with the right partners allows us to deliver on our strategy of profitable growth as a Pacific Rim airline.”

And he gave a very public vote of confidence in Virgin Australia, which is expected to record its own first half loss on Friday. “Virgin Australia has a sound strategy and I look forward to helping the airline to realise its potential when I join its Board. We are confident that over the coming years Virgin Australia can deliver consistent earnings performance.”

Comments

12 Responses to “Air New Zealand ‘goes beyond’ with record result”
  1. Glen says:

    This shows that airlines that are well run can still make a profit sometimes you have to spend money to make it . The new A320, 777 and 787 being a great example unlike QANTAS who just keep cutting back.

  2. Red Barron says:

    Haha I love the way that Australian Aviation has timed this story right in the middle of the Qantas announcement. It has made my day, good work AA.

  3. australianaviation.com.au says:

    It was their timing Red Barron, not ours.
    Cheers
    Andrew

  4. Peter says:

    Bit confused!
    How can Air New Zealand claim that ‘stable fuel prices’ aid them in making a profit yet QANTAS blame ‘battling record fuel costs’ as a reason for their loss announced today?
    Surely QANTAS (being a far larger company) would be able to gain a far better price on fuel.

  5. Peter says:

    Air New Zealand should sell their shares in Virgin to either Singapore or Etihad – both want higher ownership of Virgin. Next step is Air NZ to buy Qantas, clearly Air NZ have superior management skills, and an established and proven business plan, and contrary to Qantas, Air NZ have a real understanding of how to treat customers. Qantas attitude to customers for many years reminds me of Sir Humphrey Appleby on Yes Minister, who was spruiking a new hospital that was running smoothly because they didn’t have any patients ! Alan Joyce should book an economy seat, then later ring his own Customer Service line to try to make some changes and see exactly how pathetic their system is, and their attitude towards clients. Shameful – consistently. Then he should actually fly economy a few times to experience the realty of their off-hand attitude, then fly Singapore or Cathay to see why Australians have been voting with their feet. Of course he won’t, so him and the board will keep making irrelevant decisions that will not address bums-on-seats.
    By the way, I’m born and breed Australian, not a Kiwi.

  6. beech kid says:

    @peter I would have a feeling airnz would not be keen on buying sinking airlines after the whole ansett saga

  7. random says:

    …..invest in the customer experience, explore new markets and invest in our people and culture….

    Not much of this happening at Qantas.

    Ice and water economists deal in numbers not culture, and QF management haven’t seemed to see any connection between the two things for some time now.

    You can’t be the “Spirit of Australia” when you’re whole focus is on finance to the detriment of culture. Whilst Qantas’ requirement to reign in costs is obvious, just as importantly they need to rebuild culture and brand faith, otherwise the cost base is irrelevant. Passengers and staff need to “love” the experience, and Air NZ’s results suggest that their passengers and staff have regained their culture and loyalty.

  8. Peter says:

    Indeed, a positive passenger experience is essential to ensure a good financial outcome. Recently flew ANZ SFO_SYD and was pleasantly surprised by the attitude and service from all staff. Better all round than either QF or UAL with whom I regularly fly. Would even consider future trips between SFO/LAX and SYD with ANZ even though it requires a stopover in AKL – nice lounge to pass the hour and freshen up !

  9. Peter Brown says:

    I guess the partnership with Emirates is not as profitable as was envisioned for QANTAS. ANZ’s recent deals and promotions with Singapore and switching its’ Japan alliance to ANA from JAL are emphasizing its’ ties with the Star Alliance. Also flying only to Shanghai and depending on Star’s Chinese partners to take people further helps.. The Cathay Pacific deal also covers China even though they’re OneWorld.. I don’t think Thai has a deal with ANZ but if they do it gives them 1 more weapon to battle Emirates. I hope the ANZ strategy works.

  10. Paul Douglas says:

    Any Airline can save money by purchasing newer more fuel efficient Aircraft- which covers Airframe-Winglets & Engines & streamlining fleets to fewer types to lower maintenance & training costs similar to the Military, this covers costs of publications, specialist tools-training etc. Also If an airline cant afford new aircraft they can modify engines & add winglets that reduce drag & save fuel like AirNZ did with their exisiting 767 fleet.

  11. australianaviation.com.au says:

    Paul
    They still have to have the foresight to order such aircraft or modifications, and then the right route and fare structure to support those aircraft.
    Like I said in a previous post, if it was easy everyone would be doing it!
    Cheers
    Andrew

  12. Paul Douglas says:

    Agreed thats the tricky part:.. Great mag been buying it since the 80′s