Air New Zealand has recorded a 45 per cent drop in profit before tax to NZ$75m (A$59.5m) for the 2010-11 financial year, on the back of the Christchurch earthquake and Japan tsunami natural disasters and high fuel prices.
While recording a solid first half year profit of NZ$112m (A$89m), a second half loss of NZ$37m (A$29m) was unavoidable, according to Air New Zealand chairman John Palmer. “When reporting our interim result for the first six months of the financial year in February, we gave a positive view about the prospects for our full year performance. Within a couple of weeks of that, the dual effects of the Christchurch and Japan earthquakes caused us to update our outlook for the second half,” he explained.
The pretax result translated into a net profit after tax of NZ$81m (A$64m), down 1 per cent; while revenue was up eight per cent to NZ$4.34bn (A$3.44bn).
Despite the “challenging environment”, Air NZ CEO Rob Fyfe listed the airline’s “game changing” initiatives and a string of new alliance agreements as reasons for a more optimistic financial outlook.
“In November we introduced our Seats to Suit product into the highly competitive trans-Tasman and Pacific routes which has been a great success. While we have increased capacity by 6.4 per cent, it has been with a minimal increase to costs. We have gained market share and grown the market, with demand up 10.2 per cent and load factors increasing 2.9 percentage points to 83.3 per cent, compared to the 2010 financial year,” Fyfe noted.
“In addition, the trans-Tasman alliance with Virgin Australia was approved by the ACCC and the New Zealand Ministry of Transport in December and combined operations commenced on 26 July 2011. The positive customer feedback so far is encouraging and we look forward to the resulting financial benefit as we progress through 2012 and longer term,” he said, adding the achievement of two further alliances with Etihad and Virgin Atlantic.