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Air New Zealand reviews Japan flights as decline in yen makes travel more expensive

Tuesday 14th May 2013

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Air New Zealand, the national carrier, is reviewing its flights from Japan after a decline in the yen made flights here more expensive, crimping demand.

"Significant depreciation of yen necessitated review of Japan capacity," the airline's chief financial officer Rob McDonald said in notes prepared for an investor presentation today. The airline wasn't immediately available for further comment.

Shares in Air New Zealand rose 1 percent to $1.515, and have gained 16 percent this year.

Last month the airline flagged its annual earnings will more than double this year, and it has previously signalled plans for a $110 million profit improvement from its long-haul services by 2015, which had been an underperforming part of the company.

The New Zealand dollar has surged 17 percent against the Japanese yen so far this year. The kiwi recently bought 83.96 yen, up from 71.62 yen at the start of the year, having touched a high of 86.43.

The New Zealand currency's outperformance can largely be attributed to diverging central bank policies with aggressive monetary easing in Japan contrasting with expectations the next move in New Zealand interest rates will be up. Bank of Japan Governor Haruhiko Kuroda is presiding over near-zero interest rates while New Zealand Governor Graeme Wheeler has rates at 2.5 percent.

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