Increased fuel prices have been a headwind for Air New Zealand during the first half of the financial year with the carrier’s net profit falling 34% to $NZ 152 million.
Pre-tax earnings fell 35% (compared to the prior corresponding period) to $NZ 211 million for the six month period ending 31 December 2018.
Despite these losses the airline still saw a 7.1% increase in operating revenue and an operating cash flow of $475 million remained strong despite the challenges faced over the period.
Looking ahead to the remainder of the year, Chief Executive Officer Christopher Luxon acknowledged the rate of growth in the New Zealand market was slowing from previous years to be more in line with other developed markets.
For this reason, the airline will be reviewing its network, fleet and cost base to reflect the new environment.
“While we continue to expect solid growth across our key markets including domestic New Zealand, we cannot ignore signals that the rate of growth has slowed somewhat from prior years,” he said.
An update of Air New Zealand’s review of its network, fleet and cost base is expected by the end of next month.
Air New Zealand said it remained committed to its Pacific Rim strategy and connecting New Zealanders to each other and the world. To support that commitment, they recently announced fare drops across their domestic network.
Based upon current market conditions and assuming an average jet fuel price of US$75 per barrel for the second half of the financial year, 2019 earnings before taxation is expected to be in the range of $340 million to $400 million.
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