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Air NZ shares drop after Fyfe says more cost cuts needed

Friday 25th July 2008

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Shares of Air New Zealand fell after chief executive Rob Fyfe said the national airline may have to raise fares and extend cost cuts because of the soaring price of jet fuel.

The stock fell 3% to NZ$1.24 extend its slide in the past 12 months to about 50%. That's twice the decline of the NZX 50 Index.

The airline faces "enormous challenges" though it is in good shape, Fyfe said in an interview with Radio New Zealand. Air New Zealand's fuel costs doubled to NZ$2 billion last financial year.

The price of jet fuel has soared more than 80% in the past year as crude oil rose to a record. Air New Zealand this month imposed a freeze on executive pay as part of efforts to curb costs.

Fyfe told staff that "more than ever we need to be looking at every aspect of our business to minimise cost and seize opportunities."

The airline has raised airfares four times this year. In May, it said full-year profit may fall, reflecting increased costs.

By Jonathan Underhill

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