Air New Zealand's medium-term priority remains the transformation of its long-haul network in the face of economic turmoil and soaring fuel costs.

In a statement to shareholders on the back of the carrier's half-year results to 31 December 2011, chief executive Rob Fyfe said global factors including cost pressures in Europe and low demand from Japan resulting from last year's natural disasters in both countries had eroded profitability in its long-haul operation.

"Transforming our International Network to reflect these market challenges and restoring profitability has been a key focus over the last six months and will continue to be a priority for the medium term."

Traffic, measured in RPK, on the long-haul operation fell by 6.8% against the same period last year. Capacity was cut by 4.3% causing load factor to drop by 2.2 percentage points to 82.4%.

Part of the restructuring involves ensuring it "serves the right market with the right capacity, using the right aircraft".

ANZ took delivery of its fifth Boeing 777-300ER in January. Fyfe described the type as "in many ways a fantastic aircraft", citing fuel burn some 23% lower than its 747-400 fleet.

Further efficiencies will be gained when its first 787-9s arrive in 2014, said Fyfe, but until that point it will continue to run "some sub-optimal aircraft". Two 747s will exit the fleet this year, it said, leaving just two of the type until the arrival of the 787s in the second quarter of 2014.

Fyfe added: "In recent weeks we have seen the bankruptcy of established airlines in Europe, and airlines in the Asia Pacific region contracting their networks.

"Given the challenges facing the industry we expect more failures will follow as the year progresses. In response we must continue to adapt Air New Zealand to be a stronger, more efficient and more profitable business."

On the domestic side ANZ now flies to 27 destinations, with a 28th, Mt Cook, due to be trialled in the 2012-13 summer season, said Fyfe.

To support the domestic growth, the first two of seven ATR 72-600s will enter its fleet this calendar year.

Source: Air Transport Intelligence news