Air New Zealand reports strong interim profit, according to Investing.com

Air New Zealand (NZX: AIR ) reported a net profit after tax of NZ$129 million for the first half of 2024, compared with a pre-tax profit of NZ$185 million. Despite operational challenges, including rising maintenance costs for A321neo aircraft, the company declared an interim dividend of NZ$0.02 per share. The airline forecast a softer second half with full-year profit between NZ$200 million and NZ$240 million. Strong growth in the international network contributed to strong operating revenue of NZ$3.5 billion, with significant contributions from passenger and cargo revenue. A strong liquidity position was accompanied by rising labor costs and competitive pressures.

Key features

• Air New Zealand posted net profit after tax of NZ$129 million and pre-tax profit of NZ$185 million for the first half of 2024.
• An interim dividend of NZ$0.02 per share was declared amid operational challenges.
• The airline expects a weaker performance in the second half of the year, with pre-tax profits forecast between NZ$200 million and NZ$240 million.
• Revenues reached NZ$3.5 billion, driven by growth in the international network, with passenger revenue at NZ$3.1 billion.
• Labor costs increased by 17%, but the airline maintains strong cash flow and a solid balance sheet.

Company Outlook

• Air New Zealand expects tough profitability in the next six months, particularly in the North American market.
• The airline is focused on maintaining profitability domestically and in the Tasmania and Pacific Islands (PI) regions.
• Financial insights include managing a fuel hedge portfolio, adjusting capital expenditures and focusing on capital management metrics and credit rating.

Parish Highlights

• Increased maintenance requirements for the A321neo aircraft resulted in higher costs and operational disruptions.
• Continued competitive pressures and economic conditions are expected to negatively impact outcomes.
• Labor costs increased significantly and productivity improvements were not yet achieved.

Positive features

• Merchandise revenue remains strong and contributes to overall revenue.
• The airline records good results in the domestic and Tasmania/PI segments.
• Air New Zealand is optimistic about future prospects and hopes to improve profitability by introducing more efficient aircraft.

Failures

• The airline noticed a delay in getting new 787s.
• Revenue growth is expected to be difficult, with a modest revenue forecast for the second half.

Very good

• The CEO emphasized a commitment to customer and employee experience, which could impact cost savings.
• Discussions with Commerce Minister on airport regulations continue.
• Air fares have increased: Short-haul international routes have risen by 25-30% and long-haul routes have maintained high price levels.

Air New Zealand's interim results show its resilience in the face of operational challenges. The airline's focus on strong domestic and regional performance, coupled with proactive management of foreign debt and maintenance interventions, will sustain potential profitability in 2025. The company is committed to improving the customer and employee experience. Service quality. By taking a conservative approach to managing Covid credits and addressing maintenance costs, Air New Zealand is navigating the challenges of the current airline market while remaining optimistic for the future.

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