Air New Zealand lifted annual net profit 45 percent as it held costs while increasing capacity and passengers.
The Government-controlled airline's net profit for the year ended June was $262 million. Sales rose 1 percent rise to $4.7 billion.
Chairman Tony Carter said it was Air New Zealand's third consecutive rise in annual profit and the company had made significant progress, gaining new aircraft which offer better operating economics.
Mr Carter said Air New Zealand would increase its capacity significantly this year as new aircraft arrive.
The result was achieved despite $45 million in redundancy and retraining costs at the company.
As previously announced, the airline is closing its Auckland wide-body heavy maintenance facility and it has provided $25 million to cover the resulting redundancies. It has also provided $20 million to cover the costs of retraining pilots to fly the new planes it is buying.
Chief executive Christopher Luxon said Air New Zealand won't have any wide-bodied planes left by 2016.
Today's result does not include its share of losses from Virgin Australia, of which it owns 26 percent, because of the way it treats this investment.
Virgin has not reported its annual results yet but it made a first-half loss of nearly $A84 million.
Mr Luxon joined Virgin's board on 4 July, so Virgin's results will be included in Air New Zealand's for the current year.
The airline has decided to pay a special dividend of 10 cents per share, on top of a 5.5 percent final dividend, taking the annual payout to 20 cents per share.