Air New Zealand profit jumps despite fewer passengers as fuel hedging losses shrink

Air NZ profit jumps on lower fuel hedging losses

WELLINGTON, New Zealand — Air New Zealand’s annual profit jumped almost fourfold despite subdued demand for air travel as the carrier posted smaller losses on fuel hedging contracts and cut costs.

Net profit for the financial year ended June 30 was New Zealand dollars 82 million ($58 million) compared with NZ$21 million the year before, the carrier said Thursday. Its fuel hedging losses dropped to NZ$8 million from $130 million.

Air New Zealand chairman John Palmer said uncertainty surrounding the global economic recovery had continued to suppress demand for air travel during the past 12 months. But the airline continued to be more profitable than most of its competitors, he said.

Profit excluding year-to-year changes in fuel hedging gains or losses fell 6 percent to NZ$137 million from NZ$145 million.

“While stabilizing fuel prices and reduced operating costs provided some relief, reduced demand combined with a fall in ticket prices significantly reduced passenger revenue,” the airline said in a statement.

Operating revenue, which includes passenger, cargo and contract services like aircraft maintenance, fell NZ$563 million to NZ$4 billion. But operating costs were down NZ$583 million to NZ$3.3 billion.

Chief executive Rob Fyfe said a range of business initiatives were under way, including nearly 10 percent capacity growth on main New Zealand routes in coming months.

Fyfe said the airline industry is showing signs of recovery with both demand and revenue per passenger continuing to improve.

The airline is waiting for regulatory approvals for a proposed alliance with Australia’s Virgin Blue, which would enable Air New Zealand to compete more effectively against Qantas Airways.

Air New Zealand shares were up 5.8 percent to NZ$1.28 at midday Thursday.

A final dividend of 4 cents a share is to be paid, taking the full year dividend to 7 cents per share.