27 August 2009

AirNZ flags significant changes

AUCKLAND - Air New Zealand chairman John Palmer indicated today the way the global airline industry deploys capacity can't be sustained and AirNZ is looking at whether it has the right structure to tackle new challenges.

"We do have to ensure both structurally and operationally we have a footprint for reasonable economic returns over time," Palmer said during the announcement of AirNZ’s annual financial results.

The New Zealand national carrier posted a 90 percent slump in annual profit as operating costs rose and increased competition drove down fares.

Net income fell to NZ$21 million from NZ$218 million earlier. Revenue fell 1.2 percent to NZ$4.6 billion as the airline maintained its passenger load factor by cutting capacity by 7.2 percent.

Passenger revenue fell by NZ$74m on a 7.6 per cent fall in demand, as measured in revenue passenger kilometres. That decrease was offset by a $188m positive foreign exchange impact due to the weaker New Zealand dollar, Air NZ said.

"This result positions Air New Zealand as one of the top airline performers globally but it falls short of delivering shareholders an appropriate commercial return," said Palmer.

The airline said the current operating environment was likely to remain turbulent, a fact supported by the International Air Transport Association’s prediction that global airline losses would total US$9 billion in the 2009 calendar year.