Bill English

Wellington, Aug 27 NZPA - The Government remains committed as a long term shareholder in Air New Zealand despite the difficult times it faces and tumbling profits, Finance Minister Bill English said today.

The airline today reported a 26 percent fall in full year normalised earnings before tax of $145 million, while bottom line net profit was down 90 percent to $21m.

Chairman John Palmer said a combination of excess capacity, deteriorating demand and significant discounting had all worked against Air NZ.

But seeking to put the result into context, he also said that few airlines were making profits and even fewer were paying dividends, so Air NZ's result was positive in the global airline context.

An unchanged final dividend of 3.5c per share is to be paid.

Air NZ is 77 percent government owned since it bailed out the company in 2002 when it was on the verge of collapse mainly due to a disastrous investment into Australian airline Ansett.

Mr English said neither the result nor the difficult operating involvement had caused him to review ongoing ownership.

"We plan to be a significant owner of Air NZ, we are not planning any changes in the shareholding," Mr English said.

"Compared to other airlines they have done really well. This is a small airline a long way from large markets and to have maintained profit is a pretty major achievement."

Mr English said it was a risk to continue ownership of shares in a public company.

"But we believe the reasons why it was purchased by government still stand as a reason to keep it."

The annual report said chief executive Rob Fyfe was paid a $1.2 million base salary and was due a $1.24 bonus payment along with other shares and offers.

Asked about whether as shareholder the Government had views on Mr Fyfe's salary, Mr English said the airline had done well compared to other investments made by the Government.

"The salary is a matter for the board, they have their own incentives structure, all we can see is that the management have achieved a good result for the taxpayer," Mr English said.

"There are other organisations that have really struggled in the recession, where the taxpayer is putting in a lot of money, but they don't have to do that with Air NZ."

The company reported operating revenue for the 12 months to the end of June down 1.2 percent, or $58m, on a year earlier to $4.6 billion.

Revenue fell by $280m as the impact of the global financial crisis reduced passenger demand for air travel. Air New Zealand's passenger load factor was maintained through a capacity reduction of 7.2 percent.