Air New Zealand has announced its end of year result for FY19 with a profit of $353 million, compared to $510 million in FY18.
The result, down 31% on the previous financial year was driven by operating revenue growth of 5.3 per cent, which was offset by a $180 million increase in fuel charges, as well as a temporary increase in operating costs as the airline sought to improve network resiliency for its customers in the face of its global Rolls-Royce engine issues.
Shareholders of Air New Zealand will receive a final dividend of 11 cents per share, taking the total ordinary dividends declared for the year to 22.0 cents per share, in-line with the prior year.
Here’s the breakdown of highlights and the outlook ahead.
WHAT WERE THE FY19 HIGHLIGHTS?
Chairman Tony Carter said the result represents the relentless focus and hard work of more than 12,500 Air New Zealanders, who have risen to the challenges this financial year has presented.
While the airline say they are “disappointed” they did not meet the expectations they first set for themselves at the start of the financial year, “to have achieved a solid result despite these headwinds speaks volumes about the extraordinary dedication and commitment of their people.”
“When we first saw signs that demand was slowing, we took immediate steps to review our network, fleet and cost base, to position the airline for success in a lower growth environment. While we have made progress, this work is still ongoing.”
Tony Carter – Chairman of Air New Zealand
Tony Carter says he is very confident in their strategy and Air New Zealand’s experienced, world-class executive team who are “focused on driving our business back to earnings growth while ensuring that they maintain the airline’s strong customer-centric culture.”
Air New Zealand say they have invested a huge amount improving their customer experience; by introducing free Wi-Fi onboard their long-haul flights and announcing changes to their Economy product offering.
WHAT’S THE FY20 OUTLOOK?
Outgoing CEO, Christopher Luxon says that the airline is “in a fundamentally strong position and will target further growth that taps into new pools of demand.”
- Air New Zealand will begin flying to Seoul in November 2019, as well as offering a new seasonal service from Christchurch to Singapore, which will begin in December 2019. They’ll also be launching additional frequency into both Chicago and Taipei, as these routes continue to outperform expectations
- Another important milestone will be the return of the airlines’ remaining Rolls-Royce engines back into service, which they are expecting to happen in the coming months. This will enable Air New Zealand to bring further reliability back to their flying schedule and to utilise their most efficient aircraft in an optimum way
- The airline will also take delivery of six ATR aircraft and three Airbus A320/321 NEO aircraft in the 2020 financial year, which will provide continued growth, fuel efficiency and cost benefits on the Trans Tasman and Pacific Islands network
- An additional Boeing 787-9 Dreamliner will also join the fleet this year
- Earlier this year the airline announced that it would replace its fleet of Boeing 777-200 aircraft with the Boeing 787-10 Dreamliner, subject to shareholder approval in September. These aircraft will start to be delivered from the 2023 financial year and will be a game-changer for the airline, offering a 25 per cent improvement in fuel efficiency
Mr Luxon also stated that the airline remains committed to delivering on its sustainability strategy and initiatives.
“We know that sustainability is a critical global issue and we risk losing our social license to operate if we do not genuinely address climate change. That is why you will see us continue to invest, whether that be further reducing single use plastic items on board our aircraft or making it easier for our customers to voluntarily offset their emissions with our FlyNeutral tool.”
Christopher Luxon – Chief Executive Officer
Click here to watch Christopher Luxon commenting on the result.