Outlook difficult for beleaguered airline

By Phil Boeyen, ShareChat Business News Editor

Wednesday 31st October 2001

Air New Zealand (NZSE: AIRVA) lost $52 million before tax in the first quarter and says trading conditions remain very difficult for its core businesses.

The operating deficit for the three months to the end of September is $24.8 million worse than the corresponding period last year.

"This is due primarily to lower yield from international services and continuing low foreign exchange rates. The prior year also included the benefits from additional international traffic associated with the Olympics," the airline says.

"Notwithstanding the losses, operating cashflow for the quarter was positive."

Net shareholders equity has fallen from $518 million at the end of June to $106 million at the end of September, excluding the $300 million government loan.

Total assets at the end of September stood $4.07 billion, excluding Ansett.

The latest results come as the airline approves a five-year business plan, which it says is aimed at "stabilising the business, reducing debt and financial risk and creating a platform to return to sustainable profitability in the medium term".

The company is predicting that global economic activity, and in particular international airline travel, is likely to remain subdued throughout the current year but says it will continue to monitor industry developments and adjust the business as conditions demand.

The carrier recently cut flight schedules by up to 40% on some routes and has also increased airfares to Australia as it attempts to return to profitability.

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