Air NZ braced for higher costs
%26bull; Read Air NZ’s interim results report
Deputy chair Roger France warned there would be a significant additional fuel cost burden now that favourable hedging had rolled off fuel prices.
Chief executive Rob Fyfe said oil price volatility has reduced the certainty with which the carrier could forecast its year-end financial performance but he was confident normalised earnings before taxation and unusual items (excludes net gains/losses on non hedge accounted and ineffective derivatives that hedge exposures in other financial periods) would be better in 2008 than 2007.
The company today reported a net profit after tax of $115 million, up 58 per cent on the previous period, on operating revenue of $2.332 billion, up $205 million or 9.6 per cent on the previous corresponding period.
Fuel cost $87 million more in the six months, $32 million of that in additional volume. Hedging benefits of $38 million reduced the net cost increase to $81 million.
Domestic passenger revenues increased by 4.5 per cent while long haul capacity increased by 9.1 per cent with load factors increasing by 5.7 percentage points. Gearing improved to 48.6 per cent from 53.1 per cent at June 2007.
The board declared a fully imputed interim dividend of 5c per share, up 67 per cent on last year%26rsquo;s interim dividend.
%26ldquo;As the twin challenges of higher input costs and increased competition continue to put pressure on the business and across the industry, we are prepared to make the bold decisions necessary to maintain our customer service leadership and maximise long-term profitability,%26rdquo; France said.
%26ldquo;The $50 million investment in in-flight entertainment on the A320s and Boeing 767 fleets (announced last year) combined with increased economy class seat pitch in the front of the economy cabin will enable us to continue to strengthen our competitive position in the key Tasman market.%26rdquo;
