Wellington - Air New Zealand announced Thursday a 79-per-
cent slump in after-tax profits for the six months ending December
31, after what chairman John Palmer said was one of the toughest
periods airlines had ever faced.
The airline, which is 76 per cent owned by the government,
reported net profits of 24 million New Zealand dollars (12.24 million
US dollars) for the half-year.
Palmer cited the unprecedented price of fuel, which rose 36 per
cent on the same period in 2007, adding 211 million New Zealand
dollars to costs of running the airline.
'This combined with the deterioration in both passenger and cargo
demand, as the global credit crisis intensified, has seen the airline
deliver an unsatisfactory financial result, despite the management
team's best efforts,' he said.
The half-yearly report showed operating revenue increased by 3.7
per cent, or 87 million New Zealand dollars, on the same period in
2007 to 2.4 billion New Zealand dollars, but foreign exchange
fluctuations accounted for 75 million New Zealand dollars of the
rise.
The number of passengers on domestic and international routes was
down 4.3 per cent to 6.3 million after the airline cut capacity by
3.6 per cent.
The board declared a fully imputed interim dividend of 3 New
Zealand cents a share, which 'reflects confidence in the ability of
the company to generate returns to shareholders despite tough
conditions,' a statement said.
Palmer said Air New Zealand, which was bailed out by the
government after the collapse of its Australian subsidiary put it on
the brink of bankruptcy in 2001, remained in a strong financial
position.
'Even though the New Zealand dollar has weakened, our foreign
exchange hedging programme has shielded us from the full effects,
allowing us time to adapt our business,' he said.
'We continue to enjoy a modest gearing level, strong liquidity
levels and low capital commitments for the next two years.
'We have been able to continue investing in the business in areas
such as domestic airports, engineering and innovative distribution to
make us even more competitive.'
Chief executive Rob Fyfe said, 'I am confident that Air New
Zealand is in one of the strongest positions to weather the current
economic climate.
'In these challenging times, it is not the largest airlines that
will outperform, but the ones most responsive to change.'
Fyfe said long haul capacity would be cut by 14 per cent this
year. Up to 100 long haul cabin crew positions are being made
redundant and other cost-cutting measures included pilots taking
leave without pay, contract staff working fewer hours and a freeze on
executive salaries.
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