Air NZ profit looks better than expected
Sat "Sydney Morning Herald"
Air NZ profit looks better than expected
December 21 2002
Shares in Air New Zealand gained ground yesterday after the carrier flagged a higher-than-expected profit for the current year.
Air NZ said it expected a full-year pre-tax profit of about $NZ230 million ($210.74 million) - higher than the $NZ200 million outlined at the company's annual meeting last month.
"This increase is a consequence of the strengthening of the New Zealand dollar and better than expected trading conditions, including in the NZ domestic market," the airline said. The domestic market had responded strongly to the more affordable fares introduced with Air NZ Express, it said.
Air NZ booked a full-year net loss of $NZ319 million for the year to June 30, 2002.
Qantas Airways has agreed to buy a 22.5 per cent stake in Air NZ in a major alliance with its trans-Tasman rival. Competition regulators are assessing the deal.
Air NZ received preliminary government approval this week for the deal with Qantas.
Shares in Air NZ yesterday rose 1.5c to 47c while Qantas shares added 1c to $3.77.
Air NZ chief executive Ralph Norris described the expected result as "credible" given the current state of the global aviation industry.
However, the airline warned the outlook could be threatened by a war in Iraq, with the revised earnings estimate based on current currency and fuel price levels.
"Although this is a significant improvement on results in recent years, it must be viewed in the context of the very substantial asset employed by the company," Mr Norris said. "A profit of $NZ230 million, if it is achieved, would represent only 5.9 per cent pre-tax return on assets."
Air NZ said its Express Class, launched on November 1, had resulted in a 13.5 per cent increase in domestic traffic, compared to the previous corresponding year.
Air NZ's international traffic for November climbed 28.4 per cent, with the events of September 11 resulting in a sharp decline in demand in the previous corresponding period.
AAP