Air New Zealand has outshone its rival Qantas/Jetstar and its Australian investment, Virgin Australia, by declaring an even bigger dividend to go with surging first half profits.
Qantas and Virgin remain dividend free zones despite their own strong improvements in profitability in the six months to 31 December 2015. However Qantas shareholders will benefit from a $500 million share buyback and its employees have already received one off bonuses based on the group’s recovery on the back of restructuring and a very smart fuel hedging policy.
Shareholders in the Kiwi carrier will get a fully imputed interim dividend of ten cents (NZ) per share, an increase of 54 percent on the prior period.
Air NZ made $NZ 457 million for the first six months of the 2016 financial year, an increase of 132 percent on the prior period. Net profit after taxation was $338 million, an increase of 154 percent.
In a statement Air NZ said the interim result was driven by exceptionally strong passenger revenue growth, underpinned by over 16 percent capacity growth across the network.
On the cost side, the company continued to benefit from substantially lower jet fuel prices, as well as leveraging strong economies of scale and efficiencies from its fleet simplification program. Operating cash flow of $541 million was up 43 percent on the prior period.
Air New Zealand’s 25.9 percent stake in Virgin Australia, together with its share of Christchurch Engine Centre’s earnings, contributed $15 million and $10 million respectively, to the first half earnings.
There is no evidence of Jetstar’s increasing activities on its NZ domestic network having any effect on Air NZ’s operations, apart from possibly lifting yields higher than they would have been by carrying the low yield end of the market for it.