27 Aug 2008

Air NZ to review overseas flights as oil prices soar

2:01 pm on 27 August 2008

Air New Zealand is to review how many international flights it operates after soaring oil prices added $300 million to its fuel bill.

Air New Zealand on Tuesday reported a fall in profit as a result of high oil prices.

The national carrier made $218 million in the year to June, a decrease of 1% compared with the previous year. Its underlying earnings dropped 24% to $197 million.

The airline, in which the Government holds a 77% stake, declared a final dividend of 3.5 cents a share.

Air New Zealand says fuel costs took the gloss out of its latest financial result. Rising oil prices have added $300 million to its fuel bill, which it partly clawed back by increasing fares.

Air New Zealand says every time the price of crude oil increases by $US1, its jet fuel costs jump another $NZ12 million a year.

The airline says the cost of fuel has hit its long-haul flights the hardest and it will review the frequency of its international routes.

Air New Zealand has already reduced the number of its international flights by 4% and plans to permanently ground up to two aircraft. It says it does not expect to scrap any routes.