Air New Zealand (ANZ) reported a sharp increase in half-year earnings today amid a fall in demand resulting from tough operating conditions due to the global financial crisis.
The Star Alliance carrier reported a net profit of NZ$56 million ($38.7 million) for the six months ended 31 December, up from NZ$24 million a year ago.
Operating revenue tumbled 15% to NZ$2.1 billion as passenger demand fell 4.6% during the period. The passenger load factor was up 3 percentage points to 81.6%. Yield was down 12.5%.
"In very challenging conditions this is a good result," says ANZ chairman John Palmer. "The fallout from the global financial crisis continued to make operating conditions extremely difficult. This has been reflected in lower passenger numbers, cargo volumes and yields, resulting in a 15% reduction in revenues."
The airline says demand "remains weak" on Asian routes while US flights are "showing signs of recovery".
Long-haul passenger demand was down 7.3% for the six months while domestic demand improved 4.8%.
Chief executive Rob Fyfe says the next 12 months will be "one of the most defining" in ANZ's history.
"Our competitors will be scrambling to catch up as we introduce a world-first long-haul experience, continue to evolve our trans-Tasman and Pacific Island operation and introduce more capacity into our domestic jet operation with the arrival of new [Airbus] A320 aircraft," says Fyfe.
According to Flightglobal's ACAS database, ANZ has 25 aircraft on order including: 12 A320-200s, five Boeing 777-300ERs and eight Boeing 787-9s.
The airline says it has worked hard to adapt the business to reflect the lower revenue base. "As a result, we achieved an 11% reduction in non-fuel operating costs, with all operating costs reduced," adds Fyfe.
Looking ahead, the airline warns if current exchange rates continue, there will be a foreign exchange hedging loss of around NZ$20 million in the second half of 2010 compared to a gain of NZ$24 million in the first half. However, ANZ expects to remain profitable in the second half of the fiscal year.
The airline ended the period with a net cash position of NZ$1.1 billion at 31 December, down NZ$0.5 billion in June 2009, due to pre-delivery payments on new aircraft and other debt obligations.