Air New Zealand announces strong half year result

Air New Zealand has today announced record normalised earnings before taxation of $216 million for the first six months of the 2015 financial year, an increase of 20 percent on the previous corresponding period. Statutory earnings before taxation were $197 million, while statutory net profit after taxation was $133 million (down 6 percent).

The result was driven by strong revenue growth, underpinned by increased capacity and improved yields across the network. Operating cash flow of $378 million was up 26 percent on the previous corresponding period.

The Board has declared a fully imputed interim dividend of 6.5 cents per share, an increase of 44% on the previous corresponding period.

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Chief Executive Officer Christopher Luxon says the airline continues to focus on offering competitive fares in all markets it serves.

“Whether it be here in New Zealand, on the Tasman, to the Pacific Islands or on our extensive long haul network, Air New Zealand customers can expect to see even more competitive pricing. Initiatives like the reintroduction of the popular Night Rider service and its extension to regional New Zealand have been a hit, as have Grabaseat’s low priced long haul fares to destinations like Los Angeles and Tokyo”, Mr Luxon says.

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Result highlights:

- Normalised earnings before tax of $216 million, up 20%
- Statutory earnings before tax of $197 million, down 1%
- Statutory profit after tax of $133 million, down 6%
- Result includes equity accounted losses of $14 million from Virgin Australia
- Operating revenue of $2.4 billion, up 3.4% (5.2% excluding foreign exchange)
- Passenger revenue of $2.0 billion, up 3.2% (5.1% excluding foreign exchange)
- Operating cash flow of $378 million, up 26%

Air New Zealand's valuable monopoly on non-stop flights between New Zealand and mainland North America appears increasingly under threat as American carriers consider launching services between Auckland and California.

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But industry sources said United Airlines was now weighing the potential of the Auckland-San Francisco route with a Boeing 787 and Qantas partner American Airlines, seeking to become the dominant US carrier in Los Angeles, was looking at the Auckland-Los Angeles route.

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Air NZ chief executive Christopher Luxon last week said his airline conducted "war games" on different competitive scenarios, such as competition entering the trans-Pacific route.

"We are pretty prepared for that," he said. "I think with our financial position so strong we feel comfortable about our ability to respond to any competition."

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Air New Zealand has been issued with a formal warning by the Commerce Commission amid concerns its approach to selling travel insurance may mislead customers.

The commission began investigating the airline in January after concerns were raised about its use of "opt-out" pricing, where online customers are automatically sold extra travel insurance unless they select not to include it in their ticket.

Air New Zealand has promised to ditch the practice from April.

Commission chairman Mark Berry said it wanted all companies to use an 'opt in' approach when selling add-on products to consumers online to avoid any possibility of breaching the Fair Trading Act.

Jetstar not budging on insurance
Jetstar says it has no plans to change the way the budget airline sells online travel insurance as the Commerce Commission confirms it is investigating airlines' "opt-out" pricing tactics.

Air New Zealand was on Friday issued with a formal warning by the consumer watchdog amid concerns its approach to selling travel insurance might mislead customers.
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Wigley said after that he would look at whether to have another "crack" at Air New Zealand on extra credit card fees charged during the booking process.

Passengers who flew across the Pacific during the last 15 years are being urged to apply for funds from a price fixing class action against airlines, including Air New Zealand.

The legal case, filed in Northern California, has been labelled as "opportunistic" by Air New Zealand which is defending the case but has allowed for a potential liability in its accounts for the past eight years.

Eight airlines have already paid close to US$40 million in the case taken by San Francisco lawyers and they have advertised in today's New Zealand Herald seeking applications from passengers who may have been affected.

The action claims the airlines agreed to fix prices and this may have resulted in passengers paying more than what was necessary since 2000.

The class action lawyers are part of a group called AirlineSettlement.com.