Air NZ makes its best profit in decade

Air New Zealand has announced its best profit performance in a decade, netting a record profit after tax of NZ$214 million ($153 million). Its profit before tax for the year ended 30 June rose 79 per cent, to NZ$268 million ($192 million). This was despite a 16 per cent increase in fuel that added NZ$143 million ($103 million) to the airline's bottom line.

Air NZ has declared a fully imputed final dividend of 5 New Zealand cents per share which, when added to interim and special dividends, will return NZ$190 million ($136 million) to shareholders in financial 2007.

Airline officials said the result came from significant growth in passenger revenue and a continued reduction in unit operating costs. Passenger numbers at the airline rose by almost 5 per cent to 12.5 million, fueling market share growth and boosting load factors by 1.5 percentage points to 76.5 per cent.

Operating revenue was up 13 per cent on last year to NZ$4.3 billion ($3 billion), with the airline's business transformation program delivering a further NZ$128 million ($92 million) of revenue, productivity and costs benefits. A big driver of the boost was the success of Air New Zealand's business premier and premium economy cabins.

Not surprisingly, Air NZ has unveiled significant changes to its domestic product. Its 16 Boeing 737s will be split into two zones. The front zone would have extra legroom and would specifically cater to frequent flyers and business travellers, with complimentary snacks and beverages on some flights. The rear zone would contain a tighter seat pitch similar to its competitors and would be aimed at leisure travellers.

But experts warn that many aspects of the aviation playing field remain challenging — not least the prospect of new competitors entering the NZ airspace — and the impact of the ongoing turmoil in the global financial markets remains unknown.