26 Aug 2016

Air NZ cashes in as passenger numbers soar, fuel cost plummets

10:52 am on 26 August 2016

Booming passenger numbers and cheaper fuel have powered Air New Zealand to a record annual profit.

Check-in for Air New Zealand flights

Check-in for Air New Zealand flights Photo: 123rf.com

The airline has reported a net profit of $463 million, up 42 percent on a year ago, with revenue up 6 percent to more than $5 billion.

Air New Zealand carried more than 15 million passengers, up 5 percent on last year, while its fuel bill was 40 percent lower because of the slump in world oil prices.

Chief executive Christopher Luxon said the airline remained a standout in a crowded market.

Christopher Luxon

Christopher Luxon Photo: Supplied / Air New Zealand

"There's no doubt customers have more choice but we are confident that we have the right pricing, products and services to stay a step ahead of the competition as we grow our business at home and overseas."

However, he said it was unlikely the airline could repeat the profit in the coming year with competition getting tougher at home and on key international routes, and a stronger US dollar adding to costs, although fuel prices are expected to remain relatively low.

Mr Luxon said New Zealand was a prime tourism destination but the country had to ensure it had the infrastructure to cope with record numbers.

"We are going to run into some tourism infrastructure challenges and it will be how we work as an industry, with government, with communities to deal with that.

"And the tourism industry is looking at how we can look at different ways to fund tourism infrastructure in the future."

Air New Zealand has declared an increased annual dividend, and a special dividend of 25 cents a share. It was also paying more than 8000 staff who were not on incentive schemes a bonus of $2500.

Mr Luxon said the airline expected to spend more than $2 billion over the next five years on upgrading its planes and buying more fuel efficient new aircraft.

Earlier this week, Australian airline Qantas reported a record annual profit of $A1.02 billion, more than 80 percent higher than the year before. It reported an increase in the number of passengers carried in New Zealand by its budget operation Jetstar.

Get the new RNZ app

for ad-free news and current affairs