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Air New Zealand profit falls 24%

Tuesday 26th August 2008

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Air New Zealand, the national carrier, posted a 24% drop in profit as fuel costs surged and demand for travel waned.

Earnings before tax and one-time items fell to NZ$197 million in the year ended June 30, from NZ$259 million in 2007, the company said in a statement sent to the local stock exchange. Operating revenue rose 9.1% to NZ$4.67 billion.

The airline, whose controlling shareholder is the New Zealand government, twice cut its earnings forecast in the past 12 months as the cost of fuel rose. The company is adding more fuel-efficient Boeing 777-300 and 787-9 aircraft in the next four years to rein in costs.

Global airline losses may reach US$6.1 billion this year, more than wiping out combined profits of US$5.6 billion they earned in 2007, the company said, citing International Air Transport Association estimates.

Air New Zealand has raised fares this year to help claw back costs of jet fuel. While fuel hedges helped shield the company, unhedged prices rose 64% in the second half of the year from the same period in 2007.

Air New Zealand shares fell 0.8% to NZ$1.21 and have slumped 35% this year.

By Jonathan Underhill

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