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Air NZ expects earnings to improve next year

Fuseworks Media
Fuseworks Media

Wellington, Sept 24 NZPA - Air New Zealand is optimistic operating earnings will improve next year despite another "tough year", its chairman told its annual shareholder meeting today.

"We are one of very few airlines in the world to have paid a dividend through the last two challenging years," John Palmer said.

The board paid out a total shareholder of $75 million in dividends in the year to June 30. That was an increase of 8 percent on last year and reflected an "improved outlook", said Mr Palmer.

The airline reported an annual pre-tax profit of $137 million, a decrease of 6 percent on the prior year.

The board had confidence in Air NZ's ability to return to stronger profitability in the medium term, while also recognising the need for preserving "financial flexibility", he said.

Despite another "tough year" it had $1.1 billion in cash, operating cash flow was up 33 percent and gearing, including capitalised operating leases, was at 47 percent.

Chief executive Rob Fyfe took an opportunity to have a crack at the Australian Competition and Consumer Commission.

The commission signalled in a draft determination that it intended to decline Air NZ's trans-Tasman alliance proposal with Virgin Blue.

Mr Fyfe said the deal with Virgin Blue was a "critical plank" in its business strategy in the face of "structural disadvantages we face as a result of the accelerating pace of global consolidation".

Air NZ was very disappointed by ACC's draft decision, which "effectively puts at risk competition within Australia and across the Tasman", he said.

"We believe the regulator charged with promoting competition is at serious risk of killing it off. It is one thing to take on the challenge of competing fairly against a dominant market player. It is quite another to have to compete with one arm tied behind your back," he said.

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