Air NZ shares plumb new low on fuel surcharge

By NZPA

Tuesday 23rd August 2005

Air New Zealand shares sank to a near four-year low after the airline announced it will hike fuel surcharges by up to 28% due to rising fuel costs.

The stock touched an intraday low of $1.20c, before recovering to trade a cent higher at $1.22.

It has dipped below $1.20 just once before, on September 24, 2001 when the shares hit 88c (in adjusted terms, following a five-for-one share consolidation this time last year) as the airline teetered on the brink of bankruptcy.

At these levels, the Government is $80-$100 million out of pocket on its $1 billion investment in Air NZ, for which it paid an average of $1.30 per share.

Air NZ said yesterday it would again increase the fuel surcharge on airfares, blaming rising international fuel costs.

Domestic airfares will increase by an average of $6, or 4.5% from September 1. Trans-Tasman and Pacific Islands flights will incur a $52 per sector surcharge (up from $42).

Long-haul customers will incur a $92 surcharge per sector (up from $72). The surcharge for customers flying from New Zealand to the UK or Europe will increase from $132 to $152 each way.

The price of Singapore jet fuel is 42% higher than in August last year and about 25% higher than three months ago.

Fuel accounts for around 30% of the airline's operating costs.

Air NZ is due to reveal its annual result on Monday.

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