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financial results

Feb 25, 2016

Air NZ lands bigger first half year profits

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.

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Definitely operating in the all black, an Air NZ 787-9
Definitely operating in the all black, an Air NZ 787-9

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.

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4 comments

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4 thoughts on “Air NZ lands bigger first half year profits

  1. ghostwhowalksnz

    Thats passenger REVENUE up 16% as well. Qantas Group only managed 5% and Air NZ cargo revenue was up 21%( Qantas down 6%) which is why the maths whizz kid wont be headhunted to Europe any time soon.
    Keeping some old 747s and getting 3 more Fokker F100s doesnt make you hot property

  2. getluv

    You would hope their revenue increased that much considering the amount of capacity they added.

  3. Brown David

    Who cares really about the negative? Qantas and Air New Zealand posted great results. It means that we can be confident that the airlines in our region have the financial capacity to expand and do more for their customers and shareholders. Be happy because this is all very good news for our part of the world.

  4. endeavour.paul@gmail.com

    Warren Buffett says to steer clear of airlines as an investment. In fact he told someone in his office to shoot him if he ever bought an airline share again.

    However, I have to say that I am very happy with my shareholding in Air NZ. They appear to be very well managed and have been pumping out good dividends whilst expanding the company.

    I just have to be ready for the day that the price of oil turns up. Then it will be time to get out of Air NZ and back into Woodside.

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