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Air New Zealand posts 24% fall in half-year profit as competition heats up
[WELLINGTON] Air New Zealand posted a 24 per cent decline in half-year profit on Thursday, hurt by rival airlines expanding rapidly into the market.
Low oil prices and double-digit growth tourism to New Zealand propelled earnings to record profits last year.
Competitors like Emirates, Tianjin Airways and China Southern have also sought to gain a greater slice of the tourism boom, increasing the number of flights to New Zealand. Qatar Airways this month launched one of the world's longest flights between Auckland and Doha.
Net profit for the national carrier came in at NZ$256 million (S$260 million) for the six months to Dec 31, down from a half-year record of NZ$338 million in the same period last year.
Chairman Tony Carter said that the airline faced,"unprecedented competitive capacity into the New Zealand market." It will pay an interim dividend of NZ$0.10 per share, in line with NZ$0.10 a year ago.
The company forecast full-year earnings between NZ$475 to NZ$525 million. It has previously guided for a full-year pre-tax profit between NZ$400 million and NZ$600 million Air New Zealand said that higher oil prices, which jumped 50 per cent in the last year, had not affected the its half-year results, but increased fuel costs would be a headwind in the second half.
The New Zealand carrier may also face further headwinds on US routes if an attempt by American Airlines AAL.O and Qantas Airways to revive their partnership under the Trump administration is successful.