Ann: FLLYR: AIR: Air NZ Expects to More Than Doub

• Release Date: 30/08/12 10:30
• Summary: FLLYR: AIR: Air NZ Expects to More Than Double Earnings in 2013
• Price Sensitive: No
• Download Document  6.54KB

					

AIR
30/08/2012 08:30
FLLYR

REL: 0830 HRS Air New Zealand Limited (NS)

FLLYR: AIR: Air NZ Expects to More Than Double Earnings in 2013

Air New Zealand Expects to More Than Double Earnings in 2013

Air New Zealand is forecasting a strong improvement in financial performance
after announcing normalised earnings before taxation* for the 2012 financial
year of $91 million, up 21 percent on 2011. Statutory net profit after
taxation was $71 million, down 12 percent on 2011.

Chairman John Palmer says Air New Zealand is now well positioned to continue
the growth trajectory that it was pursuing until 2008 when the world was
gripped by financial crisis.

"We have come through some tough times and the worst impacts of natural
disasters like the Christchurch earthquake and tsunami in Japan are behind
us, which means growth opportunities are no longer suppressed. We view the
future with optimism and are pursuing a clear strategy to strengthen our
Australasian operations, while being ahead of target in restructuring our
International long haul network to improve financial performance," Mr Palmer
says.

"Despite the uncertain global economy, assuming our current forecast of
market demand and fuel prices at current elevated levels, we expect to
deliver a more than 100 percent improvement in normalised earnings before
taxation* in the 2013 financial year," he says. The Board has declared a
final dividend of 3.5 cents per share, taking total dividends for the year to
5.5 cents per share.

Chief Executive Officer Rob Fyfe says that Air New Zealand has delivered the
most consistent and best relative financial performance of any Australasian
airline over the past three years yet is far from achieving its potential.

"Air New Zealand has built a solid foundation over the past three years to
further strengthen its competitive position and comparative financial
performance. As the airline enters the next exciting chapter in its history,
we have implemented a broad suite of performance improvement initiatives that
have touched every aspect of our business and we are currently ahead of the
targets we set. This is a great tribute to the way Air New Zealanders have
worked together against a tough economic backdrop to ensure the airline is
well positioned for growth," Mr Fyfe says.

"In our domestic home market we have continued to expand our network, grow
our fleet and improve our productivity.  Despite the exit of Pacific Blue
from the domestic market, fuel costs 60 percent higher than five years ago
and airport charges increasing by 112 percent ($91 million) over the same
period, Air New Zealand's average domestic fares have actually decreased. If
airport charges had not risen, we could have lowered fares even further for
our customers. We offered more than 1 million seats for less than $100 during
the 2012 financial year and we're incredibly satisfied with the way we were
able to maintain demand during the 12 months, especially post the Rugby World
Cup when tourists left New Zealand and wallets tightened."

Mr Fyfe says the move to strengthen Air New Zealand's Australasian position
by developing a closer, more effective relationship with Virgin Australia is
now well advanced.

"The trans-Tasman alliance has been a success, exceeding our projections and
delivering our customers, and those of Virgin Australia, access to the
largest airline network in Australasia with connections into 62 towns and
cities. Our 19.99 percent equity interest in Virgin Australia gives Air New
Zealand economic exposure to its strengthening position in the domestic
Australian market, which is growing more rapidly than New Zealand's domestic
market. Further cooperation between the companies has included sharing large
fan jet engines for B777-300ER aircraft, and a collective spares inventory
with lower capital requirements. Air New Zealand has completed heavy
maintenance inspections on Virgin Australia B777-300ER aircraft, as well as
upgrade work on its B737 fleet," he says.

"In our international long haul network, our $1 billion investment in the
latest most fuel efficient aircraft, award winning interiors and service, and
the deployment of aircraft capacity on routes with the strongest demand, have
seen a significant improvement in financial performance. We expect the
international long haul network to contribute positively to Group
profitability in the 2013 financial year, well ahead of schedule.  Our fleet
modernisation programme combined with improved operating procedures and
higher load factors has delivered more than $550m in cumulative fuel savings
over the past five years and these benefits continue to accrue.  The flagship
B777-300ER burns 19 percent less fuel on a payload adjusted basis than the
retiring B747-400, while offering significantly increased cargo space. The
Airbus A320, which is progressively replacing the B737-300 on domestic
routes, improves fuel efficiency by 20 percent while offering faster, quieter
operation.

"In February this year we announced we were targeting more than $195 million
of annual performance improvements to be implemented by 2015. This programme
is well ahead of schedule, and we are now targeting initiatives to improve
profitability by $250 million, of which we expect $130 million to be achieved
in the 2013 financial year. Drivers of this include an overhead cost review,
which is now complete and continued focus on ancillary revenue opportunities.
Other factors include the benefits of a modern fuel efficient and less
maintenance intensive fleet, and a re-engineering of our international
network to ensure we are serving the most lucrative markets. These
initiatives, combined with a significant reduction in anticipated hedge
losses underpin the substantial performance improvement currently forecast
for the 2013 financial year."

Key points:
- Normalised earnings before taxation* of $91 million, up 21 percent
- Statutory net profit after taxation of $71 million, down 12 percent
- Operating revenue increased to $4.5 billion
- Gearing improved to 46.1 percent
- Full year dividend of 5.5 cents per share

*Normalised Earnings represents Earnings stated in compliance with New
Zealand IFRS after excluding net gains and losses on derivatives that hedge
exposures in other financial periods. Normalised Earnings is a non-IFRS
financial performance measure that aligns the timing of recognition of
derivative gains or losses with that of the underlying hedged transaction.
The measure is subject to review by the Group's external auditors. A
reconciliation to the IFRS earnings is provided in the Group's Financial
Statements.
End CA:00226636 For:AIR    Type:FLLYR      Time:2012-08-30 08:30:18