Air New Zealand expects to double its earnings in the current financial year and sees significant opportunities to expand it alliance with Virgin Australia, airline officials said today as they unveiled the carrier’s annual financial results.
The airline reported a net profit of NZ$71 million (A$55m) for the year ending June 30, down from NZ$81m a year earlier but better than analysts had expected. Normalised pre-tax earnings were up 21 per cent to NZ$91m.
The carrier said improvements in domestic passenger yield and a rise in passenger and cargo loads helped its bottom line, though continued weakness in demand from Europe and Japan held down international passenger numbers.
Chairman John Palmer said the airline was positioned to resume strong growth after weathering the effects of the global financial crisis and the impact of the Christchurch earthquake and Japanese tsunami.
“Despite the uncertain global economy, assuming our current forecast of market demand and fuel prices at current elevated levels, we expect to deliver a more than 100 percent improvement in normalised earnings before taxation in the 2013 financial year,” Palmer said.
The airline’s shares jumped more than 7 per cent to NZ$0.965 on the news, their highest level since December. The company said it would issue a final dividend of 3.5 cents per share, up from 2.5 cents last year. Both Qantas and Virgin Australia declined to issue a dividend after releasing their financial results earlier this month.
Air NZ’s alliance with Virgin Australia has focused primarily on trans-Tasman routes but outgoing CEO Rob Fyfe said there were opportunities to expand code sharing bookings between the two carrier’s domestic networks. Fyfe said the two alliance partners were also looking at ways to increase cooperation on North American routes.
Air NZ owns a 19.99 per cent share of Virgin Australia.