Daily ShareChat: Air New Zealand

Four key drivers will combine to help drive Air New Zealand's earnings higher over the next couple of years, says Forsyth Barr analyst Rob Mercer.

These include an improving trend in global travel, the airline's improving long-haul yileds, the 2011 Rugby world cup and the launch of its new interior design on its B777-300 in November 2010, Mercer says. The world cup should underpin up to $500 million in additional revenue through the airline's seasonally low period between July and November.

"Air New Zealand's product offering and the flexibility in its business has been its key point of difference throughout the challenges it has faced over the past few years," he says.

"Despite having the current best product and service offering for the New Zealand market, Air New Zealand continues to innovate and look at new ways to improve its product and service offerings."

It is risky to forecast airline profitability because there are so many variables which can change at relatively short notice, Mercer says.

Nevertheless, he is forecasting the airline's reported net profit will rise from $21 million in the year ended June 2009 to $101.3 million this year, to $186.9 million the following year and $240.5 million in 2012.

BROKER CALL:  buy.

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